Migration Overview

Hub-and-spoke designs have gained considerable traction and COVID might accelerate this pattern

Distributed work will continue to drive tenant demand throughout both main and secondary markets

Business website choice favoring emerging markets

Pro-business and low-cost-of-living markets have gained from business migration

Flight from high-cost entrance cities has actually accelerated since the initial break out of COVID

Population shifts are favoring the Sun Belt over high-cost entrance cities

Secret motorists of the migration pattern

Leading migration themes

Business relocationsMulti-market headquarters site-selection and expansion activity continues to favor high-growth Sun Belt cities

Taxes and governanceHigh taxes– intensified by limits on the deductibility of state and local taxes (SALT)– develops a financial incentive for individuals and services to transfer to low-tax, pro-business markets

Population migrationAffordability and quality-of-life factors to consider are moving real estate need away from high-cost entrance cities; COVID may speed up relocations amongst metropolitan families feeling area restraints

Counterpoint: resilience, resiliency and vibrancy of gateway cities

Future of work factors to consider prefer entrance citiesGateway cities are hubs of development and deal-making, while secondary cities consist of a disproportionate share of back-office operations, which might be more susceptible to automation, offshoring and extended work-from-home programs

Headwinds facing gateway cities may be temporaryAlthough COVID-related business closures and current civil unrest posture difficulties for some high-density urban markets, these factors may be alleviated by vaccine development, the election results and other drivers for change; in the words of Sam Zell: “Safe cities are the supreme talent magnet”

Gateway cities have infrastructure advantagesMany emerging markets are coming to grips with transport blockage and require major infrastructure investments to accommodate growth

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