The virus pandemic and socio-economic shockwave across the US (read ad hoc protests and riots), and more specifically in top metro areas, has created much uncertainty for city dwellers who are now fleeing for suburbs.
Over the past several months, we have documented city dwellers leaving big cities for suburbs, small towns and communities to isolate from the virus and socio-economic tensions unfolding in many metros. While the exodus from cities is still in the early stages, it's now believed by at least one expert, that city dwellers could continue to flee US metros for the next 18-24 months.
"I think the next 18 to 24 months are going to show a lot of exodus out of central business districts, as you can expect," Hessam Nadji, president and CEO of Marcus & Millichap, who spoke with CNBC on Tuesday.
"We're seeing there's a lot of office vacancy, for example, in the suburbs that have now been absorbed; there's a lot of demand for rental homes that we're seeing because people are fleeing especially hot spots like New York, but ... you just have to keep a long-term view on it," Nadji said.
He said over the next several years - suburban areas will see exponential demand. Already, real estate searches for suburban zip codes surged 13% in May, according to data via Realtor.com.
We've already noted that New York and the Bay Area are seeing residents migrate to suburbs.
- Murders Spike In NYC As Residents Flee For Suburbs
- San Francisco Rent Drops Most On Record As People Flee For Suburbs
- US New Home Sales Plunge To 10 Year Low As Exodus From Cities Accelerates
Nadji said people are also fleeing to the outskirts of Seattle and Miami.
"It was a trend that was starting to happen already over the last two or three years. You have to remember that 60% of millennials are now in their 30s," Nadji said. "While they really enjoyed the lifestyle of central business districts and the lack of commuting ... we were beginning to see them migrate back out as they were getting married and having kids," and the "health crisis has really accelerated that pattern."
He said the outbound migration from cities would also result in businesses chasing employees to the suburbs. Nadji said people won't "permanently" lose interest in cities - at the moment, this is an "overreaction" to the ongoing virus pandemic.
"We saw that [demand sap] post 9/11 and those tragedies, of course, because of the reluctance to want to locate in high-visibility high rises in downtown[s]," Nadji explained. "Eighteen to 24 months later, that [concern] began to dissipate. So, it's a normal reaction. I just don't think we should count out the long-term prospects of the benefits of central business districts."
Listen to the full interview here:
What's different today is that the country has stumbled into one of the worst public health crises in decades, tens of millions of people are unemployed, and the entire transformation of the economy, which includes working remotely will lead to permanent population loss for city centers - where living standards are in declines - as well as cost of living as a Manhattan studio costs the same as a "mansion" in the suburbs.
Guess who is most excited about this exodus? Well, baby boomers, because they bought/built oversized McMansions, with brick on front and stucco on back, in the late 1990s and early 2000s - and whose attempts to offload this real estate has been met with poor demand... until now.