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CONTRIBUTORS

Indraneel Karlekar, Ph.D

Global Head of Research and Strategy, Clarion Partners

Preview

The ongoing and rapid growth in the US Sun Belt has been an extraordinary boon to commercial real estate investors. The region stretches across eighteen states in the Southeast and Southwest and includes seven of the ten largest US cities, as well as many mid-size metropolitan statistical areas (MSAs).1 The Sun Belt now holds about 50% of the national population (335 million), which is expected to rise to about 55% by 2040.2 Over the past decade, the region accounted for 80% of total US population growth (12 out of the total 15 million).

In this paper, we look at the growth of this real estate market and how the expanding new economy in the West and South may become increasingly dominant and will continue to attract top talent. The paper considers the follow factors:

  1. Regional growth in high & low tax states.
  2. Significantly better business setting leads to private sector growth.
  3. Millennials: in pursuit of a better quality of life.
  4. Seniors & retirees: safe haven for rapidly increasing aging population.

These dynamics should greatly improve and catalyze cultural, institutional, leisure, and intellectual property growth in urban areas, as well as household wealth, likely driving outsized commercial real estate appreciation.

Endnotes

  1. Source: Clarion Partners Investment Research. Q1 2024. Note: A mid-size city is defined as one with a population between 1 to 3 million.
  2. Source: Moody’s Analytics. Q1 2024. Note: The 18 states in the Sun Belt include: Alabama, Arkansas, Arizona, California, Colorado, Florida, Georgia, Kansas, Louisiana, Mississippi, North Carolina, New Mexico, Nevada, Oklahoma, South Carolina, Tennessee, Texas, & Utah.

 

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