Major markets experienced some outflow of talent during the pandemic, but the extent of that migration was overplayed and has now slowed, according to an analysis by CBRE Americas Consulting of LinkedIn Talent Insights data. Moreover, even with some population shifts, bigger cities still have larger talent pools than most Sun Belt markets, meaning companies assessing where to hire need to have more nuanced strategies in deciding where to locate jobs.
The analysis found that while there was an initial boost of outmigration during the height of the pandemic from big coastal hubs like New York, San Francisco and Seattle in favor of more affordable Sun Belt markets, that trend has now slowed (and in New York’s case, reversed.) Moreover, the patterns differ by where people are in their career trajectories.
“We are working with real clients day-to-day on what geographies they should be in to hire,” said Chris Volney, managing director of labor analytics for CBRE Americas Consulting. Volney authored the report. “In 2020, 2021 and since then clients were reading coverage on migration and getting spooked and asking, ‘Is everyone leaving San Francisco? Is everyone leaving New York?' Because we had eyes on this data for a while, we could say, ‘The sky is not falling.’”
The data aligns with some other recent research conducted by the Brookings Institute that found large cities that experienced population losses during the pandemic are showing signs of recovery. The difference in the CBRE analysis is that it focuses on specific talent areas that many companies are focused on rather than looking at broad population trends.
According to the report, “Younger professionals tend to gravitate toward higher-cost major markets and fast-growing Sun Belt metros based on greater job prospects, networking opportunities and cultural experiences. Mid-to-late career professionals are more likely to prioritize lifestyle factors such as a desire to buy an affordable single-family house with adequate space to raise a family.”
Moreover, migration isn’t the only factor occupiers need to assess in looking at the overall talent landscape.
“When thinking about the supply of talent, migration is a piece of it, but in most markets, the pipeline of graduates is bigger than any outmigration,” Volney said. “You have to put all those pieces together to see the bigger view of the talent supply in any market. Moreover, one of the reasons we were seeing the net outmigration was the change in international migration. A lot of gateway markets rely on international migration, which slowed or stopped during COVID. But that has started to pick up.”
Looking over the three years ending February 2023, metro New York had a net outflow of around 47,000 professionals, representing a 0.6% workforce decrease, according to the report. The city experienced an out-migration the first two years of the pandemic, but experienced a net inflow during the 12 months ending in February.
For other markets, three-year outflows were also less than 1%: in San Francisco (-0.9%), Chicago (-0.6%), Boston (-0.4%), Los Angeles (-0.2%) and Washington, D.C. (-0.2%). On the flip side, Austin, Texas, experienced the most in-migration (4.1%), followed by Nashville, Tenn., (2.6%), Tampa, Fla., (2.6%), Charlotte, N.C., (2.2%) and Raleigh, N.C. (1.9%).
But on both the positive and negative sides, the pace of migration has slowed, according to the CBRE analysis. Outmigration has slowed in San Francisco, Chicago, Boston and Los Angeles. And Austin, Nashville, Denver, Phoenix, Las Vegas, Miami and Atlanta are all seeing lower rates of in-migration. Dallas-Ft. Worth, Charlotte, Tampa, Orlando and Houston were exceptions, with higher in-migration in the year ending February 2023.
“You are seeing some companies pivot back to hiring in core markets,” Volney said.
The trends also differ based on experience levels and by job type (tech talent vs. financial careers). Lifestyle and economic considerations factor in as well. In general, younger professionals are drawn to higher-cost markets and fast-growing Sun Belt metros because of the greater job prospects, as well as the culture available in larger markets.
“You are seeing in those markets there are a lot of career opportunities,” Volney said. “If you are a young person in one of those markets, there are a lot of opportunities to jump to a new job. And they are exciting, dynamic places to live with lots of other young people.”
Professionals later in their careers are more likely to prioritize larger and more affordable housing in less expensive markets.
“Seattle and San Francisco are among the top five metros for in-migration of young tech talent (0-6 years of experience) over the year ending February 2023. For recent grads (0-3 years of experience), Seattle led the way with a 15.2% in-migration rate, followed by Austin (9.7%), San Francisco (9.1%), Indianapolis (4.6%) and Dallas-Ft. Worth (4.1%),” according to the report.
For mid-to-late career tech talent (11+ years of experience), Sun Belt markets including Austin, Dallas-Ft.Worth and Tampa, had the greatest in-migration during the past three years. San Francisco (-0.4%), New York (-0.6%) and Chicago (-0.8%) all experienced outmigration among this cohort.
On the financial side, in the past year recent grads (0 to three years of experience) migrated to Sun Belt financial centers, including Charlotte (13.0%), Tampa (6.9%) and Nashville (5.3%), but also to New York (6.6%) and Chicago (4.5%). Metro New York was also a top five market for net in-migration of finance talent with four-to-six and seven-to-10 years of experience.
Aside from migration trends, the major factor impacting office markets is how often employees are coming into offices. Companies are still juggling hybrid policies. But the migration trends shed some light on this area as well.
“If you pick bigger markets, some people left, but where did those people go? A lot of them went just beyond the typical commute,” Volney said. “In New York, for example, a lot of people went to the Hudson Valley. In the Bay Area, [we] saw it in Tahoe and wine country. There’s some migration to areas where it’s still possible to get into the office for a few days. It may be a longer train ride, but it’s still an available workforce compared to people who move to, say, Austin.”