Americans Are Moving to Smaller Markets — What That Means for Commercial Real Estate

Americans are changing where they live, and that shift is starting to reshape the future of commercial real estate.

Instead of moving to large urban centers for jobs, more people are now choosing smaller markets that offer lower housing costs, simpler lifestyles, and closer access to family. This change is outlined in a new annual migration report from United Van Lines, and experts say the ripple effects will reach far beyond housing.

Why Americans Are Moving Differently

For decades, people moved mainly for work and higher pay. That thinking has changed. Today, affordability and quality of life matter more than ever. High home prices, higher mortgage rates, and remote work options have made smaller cities and towns more appealing.

In 2025, Oregon became the top inbound state for movers for the first time on record. Meanwhile, Florida and Texas, which saw huge population gains during the pandemic years, are now seeing more balanced movement in and out.

Six of the top ten inbound states were in the South and South Atlantic, including the Carolinas, Alabama, Arkansas, West Virginia, and Delaware.

According to United Van Lines, people are not moving less overall — they’re moving for more personal reasons, and their choices vary more by age group than in the past.

Younger Buyers and Retirees Are Choosing Different Paths

Younger millennials and Gen Z are leaning toward places like New Jersey, which offers lower costs than nearby New York City while still keeping job access within reach. At the same time, retirees are leaving New Jersey in larger numbers, making it the top outbound state.

Older Americans are still drawn to the South, but not at the same pace seen earlier in the decade. Rising costs, insurance issues, and new development have made some once-popular destinations less attractive.

What This Means for Commercial Real Estate

These migration shifts mean commercial real estate investors need to rethink where and what they build.

Ryan Severino, chief economist at BGO, says the new demand is less about flashy office towers and more about practical spaces. Investors may find better value in:

• Smaller office parks instead of downtown towers
• Affordable retail centers instead of luxury shopping
• Workforce housing and nearby self-storage facilities
• Community-focused services in growing small markets

As people settle into modest homes, the surrounding commercial needs also change. Storage, basic retail, medical offices, and local services become more important than large corporate campuses.

The Southern Boom Is Cooling

The early pandemic years sparked a rush into Southern states, and developers expected strong rent growth for years. Many built aggressively, especially in multifamily housing.

That surge is now easing. New supply hit record levels in 2024, and rents in several Sun Belt markets are falling. Some people who moved south for lower costs are now leaving, citing rising expenses and lifestyle trade-offs.

Markets like Arizona, Nevada, and parts of Florida are seeing this pullback, as expectations did not always match reality.

A More Careful Market Ahead

Population growth, household formation, and migration rates are all slowing, according to Census data. That means commercial real estate is no longer an easy bet based on migration alone.

Investors are becoming more selective, especially in retail. Large players are focusing on proven locations, while new projects are more likely to center on everyday needs like discount grocers and essential services.

The Bottom Line

Americans are still moving, but they’re choosing smaller, more affordable markets and doing so for personal reasons rather than pure job growth. For commercial real estate, this means less focus on big-city expansion and more attention to smart, targeted development in places where affordability and lifestyle lead the way. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.