Population size, migration patterns, aging, household composition, and the rise of remote work are reshaping demand structures, presenting both challenges and investment opportunities across the commercial real estate landscape.
The first use of the rhetorical flourish “demography is destiny” is commonly attributed to the French philosopher and father of sociology, Auguste Comte.[1] He argued that the size and composition of a country’s population will determine its future.
This is certainly true in 2025, as there are major demographic trends impacting the economy and, as a corollary, commercial real estate (CRE). These “megatrends” include a stagnant-to-declining working age population, recent unprecedented immigration (and the curtailment or even the reversal of the same), domestic migration to the Sunbelt and the Intermountain West, and inter-metro migration from the urban core to the suburbs and exurbs.
Additionally, the astounding number of remote workers are influencing geographic demand drivers, while the great number of people living alone and/or without children has implications for apartment demand.
Finally, the aging population is creating an amplified demand in several sectors including medical office buildings (MOBs), age-restricted 55+ communities, independent living facilities (ILFs), and assisted living facilities (ALFs).
CRE investors and developers who understand the nuance and the metros that will disproportionately benefit, while avoiding the pitfalls, can capitalize on these megatrends.
The US is younger demographically than other advanced economies, despite the anemic growth of its working age population. Accordingly, it is important to highlight where growth is taking place within the US. We expect migration from Coastal and Midwestern metros to Sunbelt states such as Arizona, Texas, Georgia, North Carolina, South Carolina, Florida, and Tennessee to continue, albeit at a slower pace compared to previous years.
The migration of people of various ages and education levels both precipitates, and is in response to, the relocation of businesses. For example, the shift in finance jobs has become evident as more corporate headquarters move to Florida, Texas, Tennessee, and Arizona. With migration of jobs and people comes a shift of income and tax revenue.
The above notwithstanding, although suffering losses, coastal markets including the San Francisco Bay Area continue to be very important and relevant.
WORKING AGE POPULATION DECLINES
Not only has the working age population declined for the first time during a non-war time period, but its projected growth is expected to be substantially lower over the next twenty years than it was during the previous two decades. The working-age population in the US peaked in 2020 at 194.2 million before starting to decline. Working-age population declined in 2021 and 2022, to 193.9 million, before resuming its ascent, and returning to its 2020 high in 2024, according to data from Oxford Economics. Working age population growth has historically averaged 1.3% per year over the past 120 years. This rate also averaged 1.3% in the seven years before the Global Financial Crisis of 2008 (GFC), then declined precipitously until turning negative in 2021 at -0.1%—but has begun to recover in years thereafter. However, even the twenty-year average growth rate of 0.7% is not expected to be regained over the next twenty years.
Despite projections of a declining-to-stagnant working-age population, the US is still faring better compared to other major economies in Europe and Asia.
Considering recent stagnant population growth, it is important to focus on markets in which the working age population is growing at a relatively robust pace which includes many in the Southeast, Southwest and Intermountain West.
It is particularly key to focus on the future and highlight metros in which young people between the ages of 25-34 are growing in number, as that is an indicator of future population growth. This table generally displays a similar trend on the direction of the Southeast, Southwest, and Intermountain West.
A contributing factor to the forecasted stagnation in working-age population growth includes a decline in fertility rate in the US, which is not dissimilar from that seen in other advanced economies. After reaching a peak of 3.77 births per woman in 1957, birth rates in the US began to decline through the mid-1970s, before slowly rising again and reaching a recent high of 2.1 in 2007, then declining substantially over the sixteen years since to the level of 1.62. Generally, the level of 2.1 births per woman is considered replacement level to maintain a flat population due to natural change.
Another way of looking at this metric is births per thousand in total population. In 1908, the US experienced thirty births for every thousand people (based on total population). The post-WWII high was 26.5 births per thousand people in 1947, before beginning to decline through the mid-1970s, after which slowly rising again and reaching a recent high of 16.6 in 1990. Over the thirty-three years since, the rate has declined substantially to the level of 10.7 births per thousand people as of 2023.
States that exceed the national average of 10.7 include Texas, Tennessee, Utah, Idaho, and several states in the Southeast. These states benefit from domestic migration and natural growth.
INTERNATIONAL IMMIGRATION
Over the past three years, the US has experienced an unprecedented level of immigration, significantly contributing to population growth. This influx has bolstered job growth and spurred economic activity. It helped curb inflation and bolstered the apartment market. It has also kept the unemployment higher than it would have been and became a headwind for wage growth.
While some states have experienced more notable inflows than others, the population of every US state have benefited from this trend. In some states, the arrival of immigrants has helped offset the natural population decline and mitigated the impact of domestic migratory shifts. The extent of international immigration differs based on the data source, with the US Census estimates initially drastically undercounting the level accounted for by the Congressional Budget Office (CBO). According to CBO estimates, US immigration totaled more than ten million people over the past four years.
Long regarded as the “Land of Opportunity,” or the “Golden Country,” the US has experienced periods of significant immigration in the past. In the 1850s and 1880s, waves of immigrants arrived from Europe seeking a better life or fleeing national, ethnic and/or religious persecution. Subsequent waves of immigration in the early twentieth century further contributed to this expansion.
These new arrivals contributed to the rapid industrialization and urbanization of American cities, laying the foundation for the country’s economic growth. The share of foreign-born population in the US was at its previous high of 14.8% in 1890, before declining in the first half of the twentieth century as immigration was curtailed. In the latter half of the last century, immigration began to rise once again, and based on recent CBO estimates, the foreign-born population is now 16% of the total population—a new record high.
The current policies of the US federal administration will likely curtail immigration levels over the next four years. The impact of curtailment of immigration and repatriation could be inflationary and negatively impact GDP, but could also result in greater wage growth and put downward pressure on the unemployment rate.
DOMESTIC MIGRATION
Net domestic migration is an important indicator for growth as it reflects a more intimate knowledge of economic opportunities. Migratory trends that were occurring prior to the pandemic were accelerated in the wake of COVID-19, as individuals and businesses re-evaluated their geographic preferences.
The rise of remote work further amplified these migratory patterns, enabling a substantial number of professionals to work from anywhere. The necessity and ability to work remotely, gave them the opportunity to actualize their preferences that were heretofore held back by the need to be proximate to an office. This migration was driven largely by a desire for more space, lower cost of living and taxes, business friendliness, and milder weather.
Coastal and Midwestern metros witnessed an exodus of residents moving towards the Sunbelt states. In the roughly four-year period from April 2020 to July 2024, states experienced population growth due to domestic migration alone, such as Idaho (+6.5%), South Carolina (+6.2%), Montana (+4.9%), Delaware (+4.7%), and Florida (+4.1%).
Conversely, domestic migration contributed to population loss in New York (-4.8%), California (-3.7%), Hawaii (-3.5%), Illinois (-3.3%), and Louisiana (-2.8%). Washington, DC saw outmigration of -4.3% over this period.
Although this migration has begun to slow compared to the initial post-pandemic surge, the key migratory trends continue to favor the Sunbelt. Between July 2023 and July 2024, population growth due to domestic migration buoyed South Carolina (+1.3%), North Carolina (+0.8%), Idaho (+0.8%), Tennessee (+0.7%), while contributing to population loss in California (-0.6%), New York (-0.6%), Hawaii (-0.6%), Alaska (-0.5%), and Illinois (-0.4%).
OVERALL STATE-LEVEL POPULATION GROWTH SINCE PRE-COVID
This map highlights state-level growth since prior to the Covid pandemic, which has particularly favored the Southeast, Southwest and Intermountain West.
Over any observation period, population change consists of three components: natural change (births minus deaths), domestic migration, and international migration. States with the greatest population growth are those driven by domestic migration (green). These include Idaho, Florida, Texas, Utah, South Carolina, Delaware, Arizona, and North Carolina. States such as Florida and New Jersey see benefit from strong international migration. Texas and Utah also have higher rates of natural growth.
Similarly, states with declining overall population are driven by domestic out-migration, including in New York, Louisiana, Illinois, Hawaii, and California. Washington, DC and Massachusetts owe their respective overall population growth to strong international migration, offsetting domestic outmigration.
OVERALL STATE-LEVEL POPULATION GROWTH OVER PAST YEAR
Over the past year, all states have benefitted from the robust international migration across the board. Domestic migration continues to benefit Sunbelt states.
Washington, DC; Florida, Texas, and Utah experienced the greatest growth over the past year, driven largely by growth from international immigration.
Over the past year, only five states experienced negative domestic migration greater than -0.5%, New York, California, Illinois, Alaska, and Hawaii. However, each state exhibited overall population growth due to strong international immigration. Only three states saw negative overall population growth, Mississippi, West Virginia, and Vermont (although the growth rates of all three rounds to 0.0%). Maine, Vermont, West Virginia had negative natural growth – that is to say – more people die than are born.
A key stimulant of migration is the income tax disparity between states. In general, states with zero or low-income taxes are attracting migrants from states with high income taxes. This has accelerated in the wake of the tax reform of 2017 which limited the tax deduction for state and local taxes (SALT) to $10,000.
Exhibit 19 highlights the amplification of benefits accruing to low tax and low cost of living metros. When adjusted for Regional Pricing Parities (RPP) cost of living, the chart reveals some interesting juxtapositions. For example, Omaha, Reno, and Nashville have higher adjusted income than Chicago, San Diego, or Los Angeles.
Projections for employment growth reflect a continuation of such trends, with growth projected in the Intermountain West, Texas and Florida and other parts of the Sunbelt.
INTER-METRO MIGRATION TO SUBURBS/EXURBS
Another byproduct of remote work and the increased deterioration of certain urban areas because of increased crime and homelessness is the population shift from core counties or urban sections of metros to the suburban and exurban sections of the metro. In almost all metros, the non-core component outperformed the core urban section between 2019 and 2024.
Exhibit 22 shows several select metro area county-by-county changes recorded during that time period. New York and Chicago exhibited major shifts during this time period. Although the San Franciso metro area had across the board declines, the decreases were most extreme in the core city of San Francisco.
This points to increased investment opportunities in suburban and exurban locations and the possibility of investing in urban markets at a low-cost basis.
In addition, lower cost metro areas within a two to three-hour drive of major markets have benefitted. Markets that have experienced population growth above the national average since the first quarter of 2020 include Richmond, VA (108 miles from Washington, DC), Colorado Springs, CO, (70 miles from Denver) and Portland, ME (107 miles from Boston).
THE ASTOUNDING NUMBER OF REMOTE WORKERS
The astounding surge in remote workers has fundamentally altered the demographic landscape of the American labor force. As of 2023, 13.8% of the work-force work primarily from home, up from 5.7%. However, it’s important to remember this includes all workers, not just those in traditionally office-using roles. If only office workers were included in the denominator, it would reflect a much higher percentage of remote workers.
For context, consider that approximately 22.5 million individuals now work remotely, and if this group were considered as a single entity, it would be the third largest US state in population following only California and Texas. The increase in remote workers of 13.5 million since COVID would rank as the fourth largest state. Although remote work was growing slowly as a share prior to the pandemic, this accelerated shift signifies a profound demographic trend. The rise in remote work has not only reshaped employment patterns but also influenced residential choices, leading to increased migration to suburbs and exurbs.
States with the greatest share of remote workers include Colorado, Oregon, Arizona, Washington, Maryland, and Virginia. Washington, DC, although not a state, ranks first on this list since within each of the states, urban centers tend to have higher share of remote workers, and DC essentially exhibits as a city-state in this example.
Although local job growth is a prime indicator of apartment demand, remote work has loosened the correlation as more employees may not be situated in the same area as their employer.
THE UNEQUALED NUMBER OF AMERICANS LIVING ALONE
Over the past sixty years, the share of households categorized as family households[2] has declined from 84% in 1964 to 64% in 2023. Likewise, the number of households with children under 18 has also declined over this period, from over 57% to 39%. At the same time, the number of individuals living alone has more than doubled during this period, up from 13% in 1964 to over 29% in 2023.
These trends effectively create more households and have been a broad tailwind to apartment demand.
THE AGING POPULATION: THE UNPRECEDENTEDLY LARGE SIZE OF THE 65+ AND 80+ AGE COHORTS
The 65+ age cohort is set to soar, as the youngest of the “baby boom generation” (the very large age cohort born between 1946 and 1964) turn 65 over the next four years. The cohort is expected to grow from 60.8 million in 2024 to 70.6 million by 2030 and 78.3 million by 2040.
Although the 65+ population is growing and is expected to be 32% larger by 2050, the 80+ population is expected to increase 120% during the same time period compared to 11% for the general population.
The oldest of the “baby boom generation” begin turning 80 in 2026. The 80+ cohort was 13.6 million in 2024 and is projected to grow to 18.1 million by 2030 and 26.3 million by 2040, and 30 million by 2050. This could increase demand for MOBs, age-restricted 55+ communities, ILFs, and ALFs. On average, people move into ALFs at age 85 and into ILFs at age 83,[3] which implies at the very least, some residents begin entering around age 80.
The increase in the 65+ and 80+ population is not only due to the large “Boomer” generation aging, but also because of increased longevity. Despite a decline during the COVID-19 epidemic, overall, life expectancy has increased over the past half century. Life expectancy at birth in 1975 was 72.6, increasing to 76.8 at the turn of the millennium, and reaching 78.4 in 2023.
Life expectancy from age 65 in 1975 was 16.1 (81.1 total years), increasing to 17.6 (82.6) at the turn of the millennium, and reaching 19.5 (84.5) in 2023.
DISCERNING INVESTMENT
Evolving demographic trends, including a stagnant-to-declining working age population, recent unprecedented international immigration, migration within the US and within metropolitan areas, the unprecedented number of remote workers, the changing size of American households, and the aging population create significant challenges and opportunities for commercial real estate.
As these shifts continue, or in some cases moderate, it is important for investors to develop strategies that address these trends to capitalize on the dynamic demographic and economic environment. Therefore, it is vital that investors are discerning and rely on the keen investment expertise of advisors who can differentiate true opportunities from potential minefields.
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Note from the Editor: Issue #19
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Test Of Time: How US Real Estate Withstands an Uncertain Investment Market
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South of the Border: Higher Yields and Growth in Mexican Industrial
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Migration Myth: NIMBYism and Why Coastal Movers Aren’t Affecting Sunbelt Housing Supply
Donal Warde | Consultant + Ron Bekkerman | Constellation Data Labs
Machine Center: The AI-Driven Transformation of Data Center Investment
Sam Chandan | Chen Institute for Global Real Estate, NYU Stern School of Business
AI in Commercial Real Estate: A Practical Guide for Industry Leaders
Armel Traore Dit Nignan + Shaarvani Kavula | Principal Real Estate
Artificial Control: Are You Ready for AI Management and Oversight?
Marie-Noelle Brisson + Michael Savoie | CyberReady, LLC
Capitalizing on Dynamics: Demographic Mega-Trends Impacting CRE
Stewart Rubin | New York Life Real Estate Investors
Mid-Cap Assets: An Under-Examined Segment in CRE
Asaf Rosenheim | Profimex
The Lifestyle Renter: A Growing Opportunity for Strategic Investment in High-Quality Apartment Communities
Hannah Waldman | The Dermot Company
The Climate Is Speaking: CRE Underwriting for a Future That’s Listening
Ines Diez + Thomas Stanchak | Stoneweg
+ EDITOR’S NOTE
+ ALL ARTICLES
+ PAST ISSUES
+ LEADERSHIP
+ POLICIES
+ GUIDELINES
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+ CONTACT
NOTES
1. Auguste Comte (1798–1857) French philosopher, mathematician, and writer. His ideas laid the foundations for the field of sociology, and he coined the term.
2. US Census Bureau. According to the Census definition, a Family Household is two or more people living in the same household who are related to the householder by birth, marriage, or adoption. Non-family households may comprise a group of unrelated people or one person living alone.
3. Green Street, US Senior Housing Outlook, January 30, 2025, page 17
Disclosures
NYL Investors LLC: The information presented has been prepared by Real Estate Investors for informational purposes only and sets forth our views as of this date. The underlying assumptions and our views are subject to change. This does not constitute investment advice and should not be used as a basis for any investment decision. There is no guarantee that market expectations will be achieved. The information presented herein was obtained from various sources and is subject to change without notice as market and economic conditions change. Any forward looking statements are based on a number of assumptions concerning future events and although we believe the sources used are reliable, the information contained in these materials has not been independently verified and its accuracy in not guaranteed The charts and graphs provided herein are for illustrative purposes only to assist readers in understanding economic trends and conditions but must not be used, or relied upon, to make investment decisions. Real Estate Investors is an investment group within NYL Investors LLC. NYL Investors LLC (“NYL Investors”) is a direct wholly-owned subsidiary of New York Life Insurance Company. NYL Investors is comprised of the following investment groups: (i) Fixed Income Investors, (ii) Private Capital Investors and (iii) Real Estate Investors. NYL Investors is not registered in every jurisdiction and their products or services of are not available, and materials relating to them will not be distributed, to any person domiciled in any jurisdiction or region where such distribution would be contrary to local law or regulation. NYL Investors affiliates may develop and publish research that is independent of, and different than, the views expressed. “New York Life Investments” is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company. New York Life Insurance.
ABOUT THE AUTHOR
Stewart Rubin is Senior Director and Head of Strategy and Research for New York Life Real Estate Investors, a division of NYL Investors LLC, a wholly-owned subsidiary of New York Life Insurance Company.
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