Commercial real estate can change as Americans move to new places

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Historically, Americans have moved to find better economic opportunities. But the motivation has now shifted from a “go west, young man” mentality, where free and open land offers that opportunity, to much more personal incentives related to family and affordability, according to United Van Lines’ annual immigration report.

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

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

Six of the first ten incoming states were located in the southern and southern Atlantic Ocean: West Virginia, South Carolina, North Carolina, Arkansas, Alabama, and Delaware.

“Data reveals that Americans are looking for a different pace of life, and destinations like Oregon, the Carolinas and the South are delivering on that,” Eli Cummings, vice president of corporate communications at United Van Lines, said in a statement. “Although our total number of residential moves is similar to 2024, we are seeing much greater complexity in why people move and increasingly divergent migration patterns across age groups.”

Meanwhile, younger millennials and Generation Z prefer New Jersey, since it’s less expensive than New York City. But retirees are moving out of the state, making it the top state for out-migration, according to the report.

As the logic of migration shifts to basic affordability and an easier lifestyle, the commercial real estate needed to support that may be somewhat different than if the primary driver of those migration patterns were strong economic opportunities, according to Ryan Severino, chief economist at BGO, a global real estate investment, lending and services firm.

The need for more affordable housing, more modest office complexes, and more middle- to low-income retail space are better bets for investors, he said. Even industrial real estate supports these factors. For example, if people live in smaller workforce housing, they need self-storage nearby.

Demographic shifts also play a role in this thesis. Population growth slows, the rate of household formation slows, and the rate of immigration slows over time, according to the U.S. Census Bureau.

“I think what that suggests to me, especially working for a private equity investor, is that we need to be smarter and choose our locations more carefully from a commercial real estate perspective going forward than I think in a lot of the past decades, though many decades that people have operated under this blanket assumption that, you know, these migration patterns are permanent and accelerating over time, when in fact the opposite is probably true,” Severino said.

While Americans still head to the South in search of lifestyle and affordability, migration patterns now appear more volatile and less permanent than in the past, and will not necessarily accelerate.

There was a huge migration to the Southern states in the early years of the pandemic, and multifamily developers predicted it would be a goldmine for many years to come.

“They’re buying things thinking we’re going to have 6%, 8% rental growth as far as the eye can see, we’re going to mint 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.

However, rents are now starting to fall, as oversupply works its way through the system, and some who fled to the south are now exiting.

“The reality is that people were coming to save money, and although the exodus was real, it wasn’t absent other factors, like new development, new inventory coming in. New inventory in 2024 was the highest in 50 years. And I think there was a tremendous amount of buyers’ remorse,” he said.

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

“It was nowhere near what I knew was real life,” Severino said. “And I think a lot of investors and developers saw this as a long-term structural change, an acceleration of these long-term patterns.” “So they went out and built a bunch of housing in Florida and Nevada and Arizona and places like that, and then there weren’t many of those people left.”

While snowbirds will continue to migrate south, commercial real estate investors need to be more strategic in where they put their money, according to Clancy, especially in retail.

“Guys like Simon [Simon Property Group] They will do their best, and they are…but they are very selective. No one’s going to say, “We’re going to build a mall on spec, because we expect a million people from Illinois, Michigan and Indiana to come here in the next five years.” “That’s not happening,” he said.

Clancy said he expects to see more retail geared toward grocery stores and discount stores like Walmart.

Moving data shows that although there is a new push by younger Americans toward smaller, more affordable Midwestern markets, older generations will generally choose to retire in the South, but not as much as in the past.

“Even if the population is increasing, the rates of all of these things are slowing down, which means this is probably not the situation that a lot of people who are passively interested in commercial real estate think it is,” Severino said.