City-dwellers migrate to the suburbs as teleworking goes mainstream

According to change-of-address data from the United States Postal Service, nearly nine million people moved in 2020, with much of that movement coming last March, the same month states first went into lockdown in the US.

Millions of Americans now live in a different location than they did before the pandemic started. This relocation has been most prominent in coastal states and urban areas, two areas with traditionally higher costs of living, with many residents taking advantage of newly remote jobs to move into less populated states and suburban areas.

According to change-of-address data from the United States Postal Service, nearly nine million people moved in 2020, with much of that movement coming last March, the same month states first went into lockdown in the US.

Migration trends from moving truck companies like Atlas Van Lines and U-Haul show that in 2020 people largely moved away from population hubs on the coast, such as New York and California, gravitating instead toward more rural places like Idaho and Tennessee. In Manhattan, for example, signed contracts for condos and apartments plunged more than 56% compared to 2019.

“Now that employees have the flexibility to work remotely, we’re noticing a large shift from tier-one cities such as New York, Los Angeles, and Chicago, to tier-two cities like Nashville, Austin, and Denver,” said Tyler Forte, the chief executive officer of a Nashville-based real estate company, to TMS.

One-way moves to Tennessee saw a massive increase this year, with one-way arrivals accounting for more than half of U-Haul traffic. Tennessee was the state that saw the most migration growth, according to U-Haul’s data, seeing a massive growth from last year when it ranked twelfth.

“Here in Nashville, properties that are on over an acre last all but a few hours on the market and typically sell for more than the list price,” said Forte. “Builders need to construct more housing in suburban and rural areas to keep up with the demand.”

“I’m seeing a lot of people from California move (to Tennessee) because they’re attracted to our lifestyle,” said U-Haul Company of Nashville president Jeff Porter. “Tennessee has no income tax and is very business-friendly. There are plenty of jobs. People and companies are taking note.”

Not all moves have been interstate, though, with many deciding to move from inner-city areas to the suburbs. Counties outside of major cities have seen noteworthy increases in new contracts for single family homes. Last July, Norfolk County, just out of Boston, saw a 38% increase. Collin County outside of Dallas saw 58% growth and San Bernardino County out of Los Angeles saw 62% growth.

Westchester, a suburb of New York City, saw massive growth in property sales, with sales of homes valued between US$600,000 and US$800,000 more than doubling and homes priced at over US$2 million going up by a factor of four as compared to 2019.

And with some companies offering “work from anywhere” policies for the post-pandemic world, it’s possible that some urban areas will see entirely different work structures than before.

In San Francisco, Salesforce has offered such a policy. The company owns the tallest skyscraper in the city, Salesforce Tower, and in 2019 more than half the space in the building reportedly consisted of its own office space. According to a report from real estate news site SocketSite, “there is now 10.3 Salesforce Towers, or 607 Salesforce Tower floors, worth of empty office space in San Francisco.”

But going forward, the company predicts that 65% of its employees will make the commute to work only one to three times a week.

Observers are seeing the shift and noting its potential implications on downtown business and life. If employees are living outside of the city in suburbs and only showing up at work a few times a week, Monday could become the busiest traffic day, while everyone leaves the city for the weekend.

This shift won’t just affect large businesses. San Francisco also saw a dip in its favorability as a business launch location. 40% of founders considered the city their favorite before the pandemic, while post-pandemic, only 28.4% consider it their favored launch location. Its replacement in first place, however, was not a city, but the cloud.

Ultimately, the whole shift has come from the top, says Barry Schellenberg, Atlas Van Lines president.

“People want to migrate where they want to go and a lot more companies are allowing employees to work remotely,” he said. “Very large organizations have broadcast to their employees: You don’t need to be close to the office anymore.”

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