This article was originally published on GlobeSt.com.
WASHINGTON, DC—Millennials are leaving big cities and moving to locations with a lower cost of living and higher quality of life—a demographic shift is having an impact on the available talent pools and labor costs for businesses. Research shows over the past several years, thousands of companies and hundreds of thousands of jobs have left markets in expensive cities, in part to follow the flow of talent. Cresa’s analysis shows that these companies are likely saving anywhere from 15% – 30% of annual operating costs related to labor, taxes, real estate and utilities.
“Companies from major cities on the east and west coasts have been relocating to more cost-efficient geographic areas such as Texas, Tennessee, Colorado and Washington,” Jim Underhill, CEO of Cresa, an international commercial real estate company, tells GlobeSt.com.
“In recent years, specific cities such as Austin, Dallas, Denver, Nashville, and Seattle have seen large HQ relocations and business expansions into their region, creating thousands of new jobs and resulting in billions of dollars in capital investments” he adds.
For example, Austin has seen major expansions from Google, Apple, Amazon, and General Motors plus Seattle has seen major expansions from Apple, Facebook, Google, and Uber, in addition to Expedia locating their headquarters there.
“We are beginning to see, however, that with all of Seattle’s growth, it’s losing its advantages, and other markets such as Portland, Oregon are seeing greater activity,” observes Underhill.
With millennials getting older, married, and having children, their preferences are indicating a willingness to relocate for benefits such as a lower cost of living, higher quality of life, better schools and family amenities.
Companies are following the labor market and relocating from coastal cities, such as in California or New York, and opening new operations in more cost-efficient markets. This is also in part to the demographic shifts and the business-friendly environments certain states and cities are creating for corporations.
These cost-efficient markets also offer benefits to workers as they have 40%-60% lower cost of living (compared to cities such as San Francisco, LA and New York) and higher quality of life benefits such as more affordable housing, lower tax rates and shorter commute times, Underhill says.
As expected, retail growth follows these corporate and millennial relocations.
“Retail growth is likely to organically follow where demographic and economic growth is happening. As the millennial population shifts toward geographies that offer advantages such as affordable housing, high quality of life, and lower cost of living, retail rent gains and lower vacancies will likely shift to those same regions,” says Underhill.
Consumer retail spending is at its highest where populations have disposable income growth. In these geographies where the millennial population is growing and economic expansion is occurring, retail is holding strong due to the overall increases in personal disposable income.