At a Glance —
- The US population continues to grow - .31% in 2021, .38% in 2022 and is already at .5% growth so far in 2023 as of 1.31.231
- Select US states continue to experience significant growth year on year, since 2019
- As more people relocate to a given area, the result is more buyers and thus, increased demand for goods, services and commercial real estate
- Consider in investing in commercial real estate in geographical areas of high population growth to ensure value retention and returns
The economic principle.
When considering your investment options, consider this simple economic belief — more people entering a specific market means increased demand for products and services in that market. Whether that translates to demand for apartments, storage units, retail shopping, or food — more buyers simply mean more demand and ultimately, localized economic growth.
Identify growth markets.
Choosing geographic locations for your portfolio becomes somewhat easier if you are targeting leading growth markets. Population trends over the last 3-years have been relatively consistent across select states. Those states currently include Colorado, Utah, Arizona, Texas, Georgia, the Carolinas, Florida and Tennessee. These markets have a number of things in common — they support warm weather and year-round activities, offer a lower cost of living and significant economic climates with pro-business local governments and tax rates. Every year, the net migration of new people to these markets is staggering.
Case study — Texas.
The growth of Texas continues to be impressive. Consider the following statistics2 as reported by the State Governor of Texas website —
What is the source of the growth?
While the growth of international migration and natural increase has slowed over time, domestic migration has increased and accounts for more than 55% of the growth since 2020, up from 31% when compared to the last decade.4
Invest in front of the path of growth to boost value and returns.
Capitalizing on the population growth in select growth markets helps you know where significant capital infrastructure expenditures will be made. Roads, commercial buildings, hospitals, schools, and housing growth will be in areas experiencing population growth.
Bottom line —
When investing in commercial real estate, owning assets and investments directly in front of population growth allows that trend to be the tailwind to underlying tenants and, ultimately, escalating real estate values.
Invest in your future, today.
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