Outbound Migration From Urban Areas On Rise In US And UK

BY Realty Plus

A new study from IWG, the global provider of hybrid work solutions, reveals that suburbs, small towns and rural areas across the U.S. and UK have higher levels of activity than before the pandemic, as workers migrate from urban areas. The study, undertaken in partnership with sustainability consultancy Arup, reveals that outmigration from major urban areas especially cities like San Francisco, London and New York has accelerated since before the pandemic, while fewer people are moving to those cities. 

The report concludes by 2022, patterns of outmigration resemble a continuation of pre-pandemic trends and include the loss of population or slower growth in central cities, growth in suburbs and growth in lower cost, large cities. There is evidence that migration to smaller US towns and rural areas is continuing at higher levels. 

There are also some indications that families and middle-aged adults are moving from London at a faster rate than pre-pandemic times. The study shows cities will “remain as a keystone in our society and economy. Our governance systems, transport networks, and overall built environment all situate large, dense conurbations at the centre of our societal systems.” 

But the move to hybrid working means people will spend less time in city centres, which will mean their role will evolve and there will be significant benefits for close-to-home high streets.

The report cites US research conducted by Stephan D. Whitakerfrom the Federal Reserve Bank of Cleveland, which notes net outmigration from US urban areas with a population of more than 500,000 was 75,000 a month in the early parts of the pandemic. By 2022, they had stabilised at 39,000 a month– which is 59% higher than pre-pandemic levels of 28,000.

Analysis by IWG of those levels of this data around outmigration indicates almost 500,000 people (468,000) could therefore leave those urban areas over a year. Similarly, outbound migration across the UK is continuing at a faster rate than pre-pandemic levels, and there is strong evidence that suburbs and small towns have higher levels of economic activity than before 2020.

The most common move during the pandemic was from the city centre to the suburbs. Notwithstanding this large majority, a significant proportion,  left large cities altogether, opting for less expensive or smaller cities and towns, or the countryside In addition, as house prices and rent continues to rise, the report cited research that people fled the 12 most expensive U.S. cities, including New York, San Francisco, Los Angeles, Washington DC and Chicago, as migration increased by over 10% - with New York seeing the highest rate of out-migration of them all.

Studies in India post Covid-19 reflect similar trends with people preferring to move out of large metros. Large regional cities such as Surat, Indore, Kochi, Jaipur, Lucknow, Chandigarh, Trivandrum and Indore among others have emerged as talent hubs, especially in the IT and technology services domains. Another driver for this move away from large metros has been the post pandemic, work-from-anywhere culture that has fostered flexible and hybrid working for professionals. 

In addition to emerging as future tech hubs, smaller cities are allowing for better work-life balance. This in turn is driving many top companies to sign up for large flexible office spaces across these cities, as corporations adopt a hybrid work model offering employees a choice to work out of satellite premises, According to an analysis by CBRE, Chandigarh, Jaipur, Ahmedabad, Kochi, Thiruvananthapuram, Lucknow, Indore, Bhubaneshwar, Visakhapatnam and Coimbatore will be new growth cities in the country in the coming years both in retail consumption and office space leasing.

This trend was backed by another study by talent solutions company Xpheno that revealed that the number of job openings is shrinking in metros and large cities, but it is on the rise in tier-2 locations. The study showed that active job postings and advertisements by corporates decreased 16% year on year across 9 large cities in January this year while increasing 12% in 30 tier-2 locations.

A 2021 economic impact story by IWG and Arup found that rural and suburban economies could generate up to an extra and $1.3billion in the U.S. and £327m per year in the UK, due to the forecasted expansion of flexible office and co-working spaces in towns and villages to meet the growing demand for hybrid work.   Following the surge of people migrating out of major cities like London and New York during the pandemic, the report confirmed that most opted for small towns and suburbs as workers are now providing a financial boost to areas up and down the country.

Mirroring the U.S., the UK is seeing the same migration trends, with mobile phone data revealing that small towns, suburbs and seaside locations have seen footfall rise by 50%, while transactions at Pret a Manger stores in suburban areas, particularly in northern regions of England and Scotland, have increased sharply. As of November 2022, these transactions stood at 130% of pre-pandemic levels.

Similarly, in India too, non-metro cities across the country are growing faster than their larger counterparts across diverse categories such as packaged foods, beauty, personal care and quick service restaurant chains.  As corporates, especially IT and tech companies open offices in these cities, retailers have been quick to follow suit. This trend is corroborated by a report by the Indian Institute of Management Ahmedabad that highlights how small-town India is outpacing tier 1 cities in online shopping. Online shopping transactions in these small markets are outspending their large city counterparts by up to 77%.

Furthermore, the IWG report shows a rise in spending in towns outside the traditional commuter belts as people began to work locally and cut their five-day commute into city centres. Hybrid working continues to grow in popularity with more than half of UK workers (53%) and 40% of global workers saying they operate in this way with changing costs in rents and house prices indicating that people have made this change permanently. The report shows that prices are rising fastest in places that were previously considered too far from urban centres for commuters.

According to IWG footfall data from the last year, the demand for workspaces outside of busy city centres has grown by 36%. In fact, centres in suburban, town and rural locations have seen some of the largest increases in attendance, with workers increasingly forgoing lengthy commutes to work locally. To cater to this demand, IWG will add 1,000 locations globally over the next year and the majority will be in suburban and rural locations – including in towns with populations as small as 10,000 across both, the U.S. and UK.

This report follows recent data from IWG that identified potential carbon reductions of up to 87% in U.S. and 70% in the UK, because of hybrid working, underscoring that these new working patterns could have a positive impact on the environment, as well as local economies. Ultimately, this shift means the role of city centres around the world is changing. With the rise of the 15-minute city within large city boundaries, global cities need to future-proof themselves by providing a combination of non-work services, entertainment, residential options, and workplace facilities to cater to the new working population.

Mark Dixon, CEO of IWG, commented: “The findings of the report confirm that we’re seeing a fundamental change in the geography of work with significant opportunities for the economies and communities of towns and cities globally. Previously, smaller cities, towns and rural communities were facing an existential threat as many of their most energetic and economically active members were being shipped out to a city five days a week, returning only to rest before setting off again.

“Now, hybrid working is allowing easier access to the best talent, invigorating local economies and enriching communities. Not only this, but it’s set to change the role of cities forever. Places like New York and London, whose economies have been geared to meet the needs of millions of itinerant office workers will need to evolve to become hubs for collaboration and entertainment.”

Matthew Dillon, Associate Director, Arup commented: “We are now beginning to see the impacts of hybrid working in many sectors of the economy. If executed well, there may be large advantages to businesses, which can extend their labour market, to employees that can benefit from increased flexibility, choice and an improved work-life balance, and to our major cities, which can retain their place as the command-and-control centres of the economy, whilst freeing up capacity to grow as the economy continues to create new, high value office jobs. This has broad-ranging implications, including a potential effect on where and how people live and carry out their work.

“Areas outside of larger cities also have an opportunity to benefit from new working patterns because property prices tend to be lower, and commuting distances now matter less, giving more incentive to live remotely and work hybrid. In these places, workers are commonly splitting their time between offices, workspaces, and the home.”

Tags : IWG global provider hybrid work solutions suburbs small towns rural areas UK US San Francisco London New York trends Stephan D. Whitaker Federal Reserve Bank of Cleveland