Suburbs Doing Just Fine, Thank You for Asking
Despite the prevailing narrative, more people–even Millennials–are still moving out of cities and into suburbs.
CBRE Group, Los Angeles, said in a report that despite domestic migration scenarios suggesting that Americans–and Millennials in particular–are flocking to urban cores, suburbs are not seeing declines.
The report, Millennial Myth Buster: Young Americans Do Like the Suburbs, noted that in 2014, 2.8 million people moved from the suburbs to cities; however, 4.6 million did the opposite. According to Census Bureau data, 30 percent of Millennials live within urban areas. The other 70 percent do not appear to be rushing to move downtown: in 2014, 529,000 people between the ages of 25 and 29 moved from cities to the suburbs, while only 426,000 moved in the opposite direction. For younger millennials 20 to 24 years old, the flow’s direction was even more pronounced, with 721,000 moving out of cities for the suburbs and 554,000 leaving the suburbs to pursue life in the city. Among the oldest millennials and the tail end of Gen X, negative net migration was even greater: 1.2 million people aged 30 to 44 moved from cities to suburbs, while 540,000 did the reverse.
“The death of the suburbs is greatly exaggerated,” said Darin Mellott, director of research & analysis with CBRE and author of the report. “Despite what we often hear, more people across all age cohorts–including millennials–are still migrating out of cities and to the suburbs.”
Mellott noted while it is true that some of the younger Millennials moving to the suburbs were returning to their parents’ homes, but the migration trend still holds: not every Millennial can or wants to live downtown. It is also true that certain high-profile cities, such as San Francisco and Washington, D.C., have attracted large numbers of Millennials to their urban environments in recent years. But this is not true of the U.S. as a whole.
Census Bureau data show in 2014, the U.S. was less urban than it had been in 2000. Even in the post-recession years–when many asserted that millennials were flocking to cities for employment opportunities–more people were leaving cities for the suburbs than the reverse.
“Millennials have a reputation for appreciating the perks of urban life, such as easy access to public transportation, shops, restaurants and offices,” Mellott said. “This does not necessarily translate into demand for downtown real estate, however. Suburbs too, can develop in ways that appeal to younger demographics, by incorporating elements of urban life in suburban settings, which is occurring in metros across the country. New terms have even been coined to describe quasi-urban areas in the suburbs–among them, ‘hipsturbia’ and ‘urban burbs.'”
Mellott said this has implications not only for residential markets, but commercial/multifamily markets as well. The report said downtown office markets nationwide have captured a significantly greater share of office space absorption, relative to their size, less than one-third of the time since the year 2000. During the first half of 2016, nearly two-thirds of suburban office markets outperformed their local downtown counterparts when looking at share of net absorption relative to market size. While some downtown markets across the country have outperformed–and will continue to outperform, in some cases–suburban markets, in general, suburbs are outperforming urban cores.
“Looking ahead, the evolution of commercial real estate markets will transcend the traditional lines of downtown vs. suburban, or millennial vs. boomer,” Mellott said. “The story is more nuanced and evolving in ways that create hybrid environments. For example, in many markets, suburban areas with urban characteristics are thriving…Remember, even at the end of How I Met Your Mother, they moved to the suburbs.”