Commercial real estate could shift as Americans move to new places

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Historically, Americans moved in order to find better economic opportunities. But the driver has now shifted from the “Go West, young man” mentality, where free and open land presented that opportunity, to much more personal incentives of family and affordability, according to an annual migration report from United Van Lines. 

It found Americans are not only choosing to live closer to family, but that they want smaller markets rather than urban cores as they seek cheaper housing and better quality of life. This shift will have a significant impact on commercial real estate investors and the choices they make going forward.  

Oregon was the most popular moving destination for the first time ever in 2025, while Florida and Texas, which had seen huge influxes in the Covid and early post-Covid years, are now seeing more balanced migration. 

Six of the top 10 inbound states were in the South and South Atlantic: West Virginia, South Carolina, North Carolina, Arkansas, Alabama and Delaware.

“The data reveals Americans are seeking a different pace of life, and destinations like Oregon, the Carolinas and the south are delivering it,” Eily Cummings, vice president of corporate communications at United Van Lines, said in a release. “While our total number of residential moves is similar to 2024, we’re seeing much greater complexity in why people move and increasingly divergent migration patterns across age groups.”

Younger millennials and Gen Z are favoring New Jersey, meanwhile, since it’s more affordable than New York City. But retirees are moving out of the state, making it the top state for outbound migration, according to the report.

As the migration rationale shifts to basic affordability and easier lifestyle, the commercial real estate needed to support that is probably somewhat different than if the main driver of those migration patterns was more robust economic opportunity, according to Ryan Severino, chief economist at BGO, a global real estate investment, lending and services firm.

He said the need for more affordable housing, more modest office parks and more middle- to lower-income retail spaces are better bets for investors. Even the industrial real estate that supports that factors in. For example, if people are living in smaller workforce housing, they need to have self-storage nearby. 

Demographic shifts also play into that thesis. Population growth is slowing down, the household formation rate is slowing down and the migration rate is slowing down over time, according to the U.S. Census Bureau. 

“I think what it suggests to me, especially working for a private equity investor, is that we do need to be smarter and pick our spots more carefully from a commercial real estate perspective going forward, than I think a lot of the last however many decades where people have operated under this blanket assumption that, oh, you know, these migration patterns are durable and they’re accelerating over time, when the reverse is probably true,” Severino said.

While Americans are still heading to southern regions for lifestyle and affordability, migration patterns now appear to be more volatile and less durable than they have been in the past and will not necessarily accelerate. 

There was a huge migration to Southern states in the first years of the pandemic, and multifamily developers expected that to be a gold mine for many years to come. 

“They would buy things thinking we’re going to get 6% and 8% rent growth for as far as the eye can see, and we’re going to be minting money and, in five years, we’re going to double what we paid for this thing,” said Manus Clancy, head of data strategy at Lightbox, a commercial real estate data and analytics platform.

Rents, however, are now coming down, as oversupply makes its way through the system, and some who fled to the South are now moving out.

“The truth is that people were coming down to save money, that while the migration was real, it wasn’t absent other factors, like new development, new inventory coming on. The new inventory in 2024 was the highest in 50 years. And I think that there was an enormous amount of buyers’ remorse,” he said.

Arizona, Nevada and Florida are prime examples of where companies relocated and people moved for a so-called “better quality of life” but are now leaving.

“It was not anything approximating what I know to be real life. And I think a lot of investors and developers took that as more of a longer-term structural change, an acceleration in these longer-term patterns,” Severino said. “And so they went out and they built a bunch of housing in Florida and Nevada and Arizona and places like that, and then a lot of those people didn’t stick around.”

While snowbirds will still migrate to the South, commercial real estate investors need to be more strategic in where they’re putting their money, according to Clancy, especially in retail. 

“Guys like Simon [Simon Property Group] will do the high end, and they are … but they’re being very, very selective. Nobody’s going out there saying, ‘We’re going to build a strip mall on spec, because we expect a million people from Illinois, Michigan and Indiana to come down here in the next five years.’ It’s just not happening,” he said.

Clancy said he expects to see more retail geared toward discount grocers and stores such as Walmart. 

Moving data does show that while there is a new push by young Americans to smaller, more affordable Midwestern markets, older generations will generally choose to retire in the South, but not nearly as much as they have in the past. 

“Even if the population is getting bigger, the rates of all of these things are slowing down, which means it’s probably not the layup that a lot of people who even passively pay attention to commercial real estate perceive it to be,” Severino said.