Commercial Real Estate and Migration: What Can the Employment Composition of Local Job Markets Tell Us about Future Demand?

14 Pages Posted: 24 Mar 2020

See all articles by Calvin Schnure

Calvin Schnure

Nareit

Alexandra Thompson

National Association of Real Estate Investment Trusts®

Date Written: February 26, 2020

Abstract

Demographics and population growth are among the most important factors affecting real estate markets. Differences in population growth between U.S. metros are driven largely by domestic migration patterns.

What explains migration patterns, and can this help anticipate future conditions in commercial real estate markets? We examine the structure of local job markets and find that metros with higher concentrations of certain professions like management, business and finance, have persistently higher in-migration, while metros with greater focus on production, transport (and “material moving”) saw lower in-migration or net outmigration. Jobs in computer, science, and engineering were the largest driver for international migration.

These migration patterns have a statistically significant impact on apartment and office markets, including higher rent growth, larger price increases, stronger demand growth and new construction. Among metros like Seattle and Austin, high levels of construction may be warranted by future in-migration in response to the composition of professions in the local job market.

Keywords: commercial real estate, migration, vacancy rates

JEL Classification: R22, R33

Suggested Citation

Schnure, Calvin and Thompson, Alexandra, Commercial Real Estate and Migration: What Can the Employment Composition of Local Job Markets Tell Us about Future Demand? (February 26, 2020). Available at SSRN: https://ssrn.com/abstract=3544939 or http://dx.doi.org/10.2139/ssrn.3544939

Calvin Schnure (Contact Author)

Nareit ( email )

1875 I Street, NW, Suite 500
Washington, DC 20006
United States

Alexandra Thompson

National Association of Real Estate Investment Trusts® ( email )

1875 I St. Suite 500
Washington, DC 20006
United States

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