FLEEING FROM URBAN COUNTIES SPEEDS UP

More than two-thirds of U.S. counties with an urban center and a population of 250,000 or more lost population last year for the first time in 50 years, according to federal data analyzed by the bipartisan Economic Innovation Group.

Eighty percent of exurban counties—those lying outside suburbs but not far enough out to be “rural”—gained households.

“While there has been much discussion of a flight to the suburbs, the share of suburban counties growing actually declined,” the report said.

“Instead, exurban and rural counties saw a rising share of counties that gained population, with non-metropolitan rural counties seeing the highest population gain since 2008,” it noted.

Cheaper homes and more space prompted the migration, the study found.

“The tendency is for people to maybe be attracted to cities when they’re younger and then move out to the suburbs and exurban places to find bigger, cheaper housing when they choose to have families,” August Benzow, the study’s chief researcher, told Yahoo! News. 

In 2011, almost all of the counties gaining the most population were urban; last year, only three counties were in that group.

Also, the trend of migration from the eastern U.S. to the west continued.

Arizona’s Maricopa County, which includes Phoenix, was the fastest-growing area, bucking the trend away from urban areas.

Every county in Nevada added people and “remote rural counties in eastern Oregon and northern Idaho experienced robust population growth,” the study found.

TREND FORECAST: The migration away from urban centers further confirms our trend forecast made two years ago in “Real Estate Dead? Time to Buy?” ( 20 Apr 2020) that the commercial real estate business in urban centers is undergoing a long-term decline.

Remote work as the new normal has spread skilled workers farther from the traditional business hotbeds, particularly on the coasts, and will create new centers of tech, financial, and innovative gravity around the country, reducing the coasts’ cultural influence and giving more to what have been second-tier metro areas in the heartland.

As more people work remotely, commercial real estate prices, especially office buildings, will fall further. In turn, businesses and transportation systems that relied on commuters will economically suffer and jobs in those sectors will disappear permanently.

Therefore, the shift to working at home will redefine economic ecosystems, both in exurban areas and in urban centers. 

Exurban counties will add retail and service businesses, enriching the quality of life, adding jobs, and attracting more residents. Local planning commissions will need to be aware of the trend and take steps to ensure that exurbs do not become appendages of sprawling suburbs.

Urban centers face the opposite problem.

Commuters coming downtown to work buy lunch, gifts, clothes, gadgets, and other items; as workers stay home and more move out of commuting range, downtown stores and restaurants are losing their traditional customer base and gas stations along commuter routes will see business plummet.

At the same time, owners of commercial real estate face a reckoning.

Many will slash rents to lure a shrinking base of tenants, forcing them to demand property tax concessions from cities that will struggle even more to maintain police, fire, and public works infrastructures. 

As city services decline, so will the quality of life; more people will leave, creating a downward spiral.

Therefore, to keep residents, businesses, and buoy property tax revenues, cities in decline can become laboratories for innovation in everything from marketing their brand identities to negotiating with businesses over taxes to the ways in which essential services are provided.