The COVID-19 pandemic is prompting many Americans to consider moving from urban areas to the suburbs or rural locales – a potentially bad sign for businesses like offices and downtown restaurants.
A Harris Poll of 2,050 U.S. adults conducted from April 25-27 found that 39 percent of city residents said the COVID-19 crisis has prompted them to consider living in less crowded places.
Perhaps most surprisingly, 18- to-34-year-olds – who are considered to be at a low risk of dying from the virus – were more likely than other age groups to say they’re considering a move.
“Space now means something more than square feet,” Harris CEO John Gerzema said. “Already beset by high rents and clogged streets, the virus is now forcing urbanites to consider social distancing as a lifestyle.”
JPMorgan Asset Management and American Homes 4 Rent are betting that their joint venture to build two subdivisions on the outskirts of Las Vegas is perfectly timed. The two mega-companies recently closed on single-family home rental projects in the Sovana and Spring Valley neighborhoods of Vegas. They will feature a dozen three-bedroom homes and 22 four-bedroom dwellings.
Mike Kelly, head of real estate Americas at JPMorgan Asset Management, said that while the companies want to lure “millennials [who] are looking to transition away from apartment living, the move toward more spread-out living is also expected to accelerate in the wake of the COVID-19 pandemic. We anticipate strong occupancy and rental growth rates across properties.”
In Boston, Jill Boudreau, senior vice president at Compass, a real estate agency that specializes in the fancy suburban towns of Wellesley and Weston, told Boston Magazine that she expects some city residents will move to the suburbs when COVID-19 clears.
“There is definitely going to be, I don’t want to say a flight to ‘the suburbs,’ but [to] towns like Wellesley that help bridge the urban to suburban,” she said. “We definitely have seen an uptick, particularly in younger buyer interest.”
But while that’s good news for the suburban economy, it’s a bad sign for urban businesses like real estate and restaurant firms that cater to office workers.
The New York Times reported this week that major firms like Barclays, JPMorgan Chase and Morgan Stanley are all debating whether they really need to maintain the more than 10 million square feet of New York office space. The three firms have more than 20,000 employees in the city, but it seems remote workers are doing just fine from home.
Barclays CEO Jes Staley told the Times that “the notion of putting 7,000 people in a building may be a thing of the past,” and a company spokesman said Barclays is looking at requiring workers to only show up on as as-needed basis.
That’s bad news for the urban restaurant industry, which is already struggling from stay-at-home orders. PYMNTS reported on Thursday (May 14) that several iconic urban restaurants are unsure when they’ll reopen – if ever.
Chef Daniel Humm, owner of Manhattan’s Eleven Madison Park, said he might never reopen. And Danny Meyer, founder and CEO of Union Square Hospitality Group, said he doesn’t see reopening the dining rooms of his 19 New York City restaurants until there’s a coronavirus vaccine. “It’s very frustrating, but it’s the only safe way to go,” Meyer said.