Post-Pandemic Flight Back to Urban Areas
May 17, 2023
Did you know that patterns of population growth and decline moved back toward pre-pandemic rates last year?
Some of the most popular U.S. counties took a population hit in 2021 following the pandemic. However, according to data published by the Census Bureau, this movement of people away from urban centers reversed in 2022.
Eleven of the 15 largest metro areas gained residents or lost fewer people compared with 2021, including Dallas, metro Washington, D.C., New York City, the San Francisco Bay area, and Seattle. Counties in the South and West have mostly returned to their status as the fastest-growing ones nationwide. Texas and Florida in particular are home to a large share of rapidly expanding counties.
For example, Dallas, Texas, lost 22,000 people between 2020 and 2021, but between 2021 and 2022 gained 13,000, which is the fastest gain that Dallas County has seen since 2017.
How Has This Population Shift Affected CRE?
More people in cities equates to increased consumer needs. This presents commercial opportunities to businesses to cater to these needs. Cities with growing populations therefore have seen a particularly marked increase in retail.
The resurgence of brick-and-mortar retail is an encouraging sign for the industry, and the increase in occupancy of new retail assets indicates a growing demand for physical storefronts.
While there are similar real estate need patterns across major metropolitan areas, each region has its own unique character and is creating specific commercial opportunities. For example, certain cities are seeing a surge in movie theatre visits, indicating a demand for entertainment options. Other areas are seeing a strong office recovery, suggesting a need for office space and a return to in-person work. And some districts are experiencing a surge in grocery visits, which could indicate a preference for local and independent stores.
Overall, this trend towards physical storefronts underscores the importance of an increasing urban population and its effect on commercial real estate investors.
