This Pandemic Could Spark an Urban Exodus
WHY YOU SHOULD CARE
This pandemic could accelerate the urban exodus.
Jordan Howard never planned to leave Los Angeles, where she’d been born and raised. The 28-year-old entrepreneur and marketing strategist says she always had a “ride or die L.A. personality.” But after spending a few weeks in Atlanta for work last fall, Howard was tempted: She’d been shelling out far too much of her income for sky-high rent in a city that had become painfully costly to enjoy. A place like Atlanta could offer a slower pace and upward gains that feel impossible in California — perhaps she could even buy a house in the coming years.
Howard decided to move before the pandemic struck. Though she’s lucky to remain employed, her company’s economic stability could become uncertain. And while she can’t settle in Atlanta just yet, Howard says the impending recession makes the need to move and cut costs feel even more urgent.
The pilgrimage of millennials from high-cost coastal hubs to smaller metros is nothing new. But the coronavirus pandemic is accelerating this demographic shift, say experts, at a time when working from home could become the new normal in many industries — while millions are suddenly finding themselves without work. Well before the current crisis, we saw young professionals like Howard who live in coastal hubs like Los Angeles, Boston, New York and San Francisco move to populous but more affordable places, sometimes called “second-tier cities” (think Dallas, Houston, Nashville, Columbus and Orlando). Within the costliest metros, there’s been steady movement to the suburbs and outskirts, says Joel Kotkin, a presidential fellow in urban futures at Chapman University. More recently, we’ve started to witness people shift to smaller cities with populations of 500,000 or fewer residents.
New York, Los Angeles and Chicago led cities in net out-migration between 2012 and 2017, according to a Brookings analysis, collectively losing 70,000 people in the 25-34 age group. Houston, Denver, Dallas, Seattle and Austin saw the biggest gains in millennial residents in this period. Meanwhile, more people now work from home than take public transit to work — and Raleigh, Austin and Denver are the nation’s leading cities for remote work, according to New Geography.
As the nation braces for a recession the IMF predicts will be the worst since the Great Depression, economists and demographers caution it’s too early to gauge whether more Americans will be moving in the short term. For the moment, evictions and foreclosures are frozen in many locales. But the U.S. could see a mobility spike among those whose job loss forces them to seek cheaper housing immediately once the economy resumes, says Igor Popov, chief economist at Apartment List. At the same time, there’s likely to be a decline in instances of people moving out of preference. Meanwhile, Kotkin anticipates a new wave of urbanism in suburbs and small towns. “Places will see a revival of their urban cores as people are less likely to go to New York or San Francisco. … But they may end up in Springfield, Missouri,” Kotkin says.
This could have radical implications for cities.
Wendell Cox, urban policy analyst
There’s likely to be an uptick in teleworking among higher-paying knowledge sector jobs that lend themselves to remote work, says Popov. Kotkin also expects more business services and banks to go digital, as workers increasingly question why they “have to commute an hour to go from one computer screen to another.” Popov expects employers “will think more critically about who needs to be in close proximity to one another and who does not” to make department-by-department decisions. Leaders might reason that the executive and engineering teams should be together, for example, but that the accounting team can work remotely.
While commercial real estate market could see a revenue dip, this also means companies could reduce their most expensive line item. “Even if you can shrink your commercial real estate costs in half in a place like San Francisco or Boston, that will save you a tremendous amount of money,” Popov says. Square footage per worker declined by 8 percent nationally between 2009 and 2018, according to a Corporate Real Estate report published in 2018.
Over the past five years, companies also have begun to disperse workforces nationally rather than only clustering employees in their headquarter cities, says Popov. But as new back offices have cropped up in emerging tech hubs, this has spawned an ironic duality: Cities with higher rates of remote workers are also the places with ample office jobs. This is in part spurred by couples where one partner’s relocated office job means the other works remotely, explains Popov. “This really flies in the face of the … daydream of working remotely someplace very remote,” he says. To keep up with those changing needs, developers have been increasingly constructing houses with workspaces, says Kotkin.
To be sure, economists and demographers agree it’s too soon to predict the economic shakeout. But when it comes to how tomorrow’s cities will look, Kotkin isn’t betting on “dense, expensive, transit-oriented” ones. That sentiment is echoed by Wendell Cox, an urban policy analyst with New Geography, who predicts both less interest in downtown jobs on behalf of employees and fewer downtown projects on the part of developers. That would be far from ideal in the eyes of many housing advocates who argue that upzoning and better transit are key to addressing housing shortage and affordability challenges.
Experts are eyeing places that have lower housing costs but still offer urban amenities that city dwellers enjoy as alternatives to bustling downtown areas. But that poses another contradiction: The bars, coffee shops and concert venues that people flock to midsize cities for are the businesses taking the biggest hit amid the economic shutdown, says Popov.
Yet there are glimmers of promise. The economic recovery after the Great Recession was concentrated in a few “superstar markets” — the same cities where cost of living has become untenable for people like Howard — while job prospects in many other regions never recovered. But this time around, the ability to do one’s job anywhere could slow widening geographic inequality and democratize economic opportunity instead.
For centuries, American cities have been equivalent to the labor market. Whether or not people particularly wanted to live there, they followed the jobs. Untethering Americans from those roots, planted by preference for some and necessity for others, could free people to sow seeds in fields that might welcome the growth. “Over a long period of time, this could have radical implications for cities,” says Cox.