Peter Muoio of SitusAMC Insights: Migration Out of Big Cities Opportunity for Some Who Previously Couldn’t Afford It

Peter Muoio is head of SitusAMC’s Insights division, a provider of technology and services to the real estate finance industry. He has more than 30 years of research and analytics experience in the commercial real estate industry. His previous roles include chief economist and head of data insights at Ten-X Commercial; head of CW Capital’s research group; and global head of real estate research at Deutsche Bank. He has a doctorate in economics from Duke University. He can be reached at

MBA NEWSLINK: What have you observed about the nation’s emergence from the pandemic?

Peter Muoio

PETER MUOIO: The most interesting thing about the pandemic recovery is that the entire U.S. isn’t recovering at the same pace. Based on our SitusAMC Insights Current Momentum Heat Maps, which measure the economic outlook of the top 50 U.S. metropolitan areas, most markets are recovering rather well, but there are growing disparities among different markets and among different regions of the country. The same can be said about the commercial real estate markets in different areas of the country.


MUOIO: Well, the rapid adoption of remote work has had a major impact on many metropolitan areas, especially gateway cities like New York, Chicago and San Francisco. Freed from geographic restraints, more Americans migrated away from big cities to smaller cities where housing and the cost of living was cheaper. As a result, the recovery in gateway cities has been much weaker than in secondary markets.

Local economies were also a factor. Lockdowns had a severe impact on the retail and hospitality sectors, for example, so areas that depended on tourism, like Miami, have been slower to recover. On the other hand, markets with diverse economies are doing much better.  

NEWSLINK: What was the regional impact?

MUOIO: Generally speaking, current economic conditions and the short-term outlook are strongest in the Southeast and Southwest and weaker in the Northeast and in much of the Midwest, where conditions have been slower to improve. Meanwhile, the growth outlook in the West is good yet not robust.

NEWSLINK: How are you determining a strong versus weak market?

MUOIO: For our Current Momentum Heat Maps, we use a quantitative analysis to identify the current trend in economic activity and the outlook over the next several years based on their economic composition and demographic trends. Our property segment heat maps look at a host of commercial real estate fundamentals data and proprietary forecasts to gauge the outlook for each property segment in each market. For the Current Momentun analysis, we were able to draw on our proprietary data and third-party sources, which include employment and household income.

If you look at our map, you’ll see we gave each market one of six numerical rankings indicating the strength or weakness of its economic outlook over the next five years. Each market was also given an arrow representing which way the outlook is trending, according to our most recent quarterly analysis. I should mention that while many markets had a relatively modest or weak outlook, all but 6 out of 50 were showing improvement and none were showing deterioration.

NEWSLINK: Zeroing in individual markets, which areas are the strongest?

MUOIO: Of the larger metropolitan areas, Atlanta, Dallas and Phoenix were among the strongest in terms of short-term outlook and overall improvement. In Phoenix, growth had already been torrid leading into the pandemic, thanks to its diverse economy, affordability, and high-caliber workforce. Atlanta also has a diverse economy and a favorable cost of living.

California’s Riverside-San Bernardino-Ontario market—also known as the Inland Empire—had only a moderate economic outlook according to our heat maps. However, it was ranked strongest in the country during the fourth quarter of 2020 by NCREIF returns in the multifamily segment. The area has a booming industrial property market, and many Los Angeles residents are moving there for cheaper housing costs. Two other strong markets are Denver, which is experiencing strong population growth, and the Cambridge-Newton-Framingham area in Massachusetts, which benefits from a healthy life sciences industry and a highly educated workforce that helped drive very strong office segment returns in the fourth quarter.

NEWSLINK: What about the weakest markets?

MUOIO: At the bottom of our list was the San Francisco and the San Francisco Peninsula. While conditions there are improving, several tech companies like Hewlett Packard and Oracle have moved out, as pre-pandemic commercial property prices were unsustainable in a remote work environment. Houston, which is home to more than a third of publicly traded oil and gas companies, is also hurting, due to last year’s record plunge in energy consumption and a glut of industrial properties.

Besides Miami, another weak market is Washington, D.C., where the high concentration of government jobs that went remote had a huge impact on the retail economy. Chicago, which I mentioned earlier, is also experiencing population outflows as well as a loss in warehousing activity, which has shifted to neighboring Midwest markets.

NEWSLINK: What trends have you identified?

MUOIO: In almost every region, economic conditions were better in smaller markets than in larger cities, according to our heat maps. For example, in the Midwest, Chicago and Detroit had weak outlooks while less sizable metros had moderate forecasts. Only the Southeast had a large metro – Atlanta – with a strong outlook. From a nationwide perspective, the Northeast had the weakest outlook overall.

NEWSLINK: How do migration trends look?

MUOIO: We’re seeing more people leaving areas with high housing costs and high taxes, like California and the Northeast, and moving to the Southeast, Northwest and Southwest. The beneficiaries of the exodus are states like Florida and Texas and cities like Dallas, Denver, Salt Lake City and Palm Beach. This is really a continuation of a trend that has been happening for years but has picked up steam during the pandemic.

NEWSLINK: What is the outlook for big cities in general?

MUOIO: For large cities like the Big Apple, Boston and Philadelphia, as well as Los Angeles and San Francisco, it’s going to be a long haul getting back to business. The big question is if and when to bring workers back to the office. And it’s not just the office-based companies that feel the impact, but all the businesses who feed off downtown businesses, including restaurants, beauty professionals and gyms.

NEWSLINK: Should big cities be worried?

MUOIO: One good thing for large metros is that all of the net migration has driven down rents, which means that people who previously couldn’t afford the big city life now have a shot at it. Rents in New York are lower than they’ve been in a long time. So yes, there is hope. We believe cities will become vibrant once again after the initial slower start.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at; or Michael Tucker, editorial manager, at