The U.S. Census Bureau recently released new population estimates that detail growth across the U.S., broken down at a county level. This data highlights key trends affecting commercial real estate across asset classes and continues to drive investment theses. While the overall theme may feel familiar—the southern U.S. continues to see the bulk of the population growth—there are some notable surprises in the data, with new trends emerging for the years ahead.
An important caveat: This data encompasses population changes for the second half of the prior year, and the first half of the given year. In other words, when referring to 2023 population growth, the data referenced would include the second half of 2022 and the first half of 2023.
Unsurprisingly, every major market (population over 1 million) that grew by more than 1% in the U.S. was in the Sun Belt. However, for the first time in 12 years, Austin, Texas, no longer leads the nation in population growth on a percentage basis. The top market is Jacksonville, Florida, which grew at 2.2%—up from 1.5% a year ago and rank fourth at the time. Austin still ranks second, with 2.1% growth, and remains the fastest-growing major metro in the country since 2020, having grown 7.5% since then. The next fastest-growing market in that time frame is Raleigh, North Carolina, which has grown by 6.5% over that same time frame.
Big Metros
At the top of the list for nominal population growth are the third- and fourth-largest metros in the country: Dallas-Fort Worth and Houston, Texas. The Dallas-Fort Worth metro grew by about 153,000, equating to 418 people per day. Houston grew by about 140,000, more than twice the growth seen in Atlanta, the third fastest-growing market, which grew by about 69,000 people. The two Texas metros accounted for more than a third of overall population growth among the 60 MSAs with more than 1 million people.
Growth is rounding out, however. In 2023, population in the Sun Belt’s major metros grew by about 810,000—essentially in line with the rate of growth in 2022. However, other regions of the country saw a notable improvement from a year prior:
- The western region saw a net gain of about 100,000 people compared to about 20,000 a year prior.
- The Midwest region saw a net gain of about 35,000 compared to a net loss of nearly 65,000 people in 2022.
- The Northeast saw a net loss of 83,000 in 2023 but saw the biggest improvement year-over-year (YOY), as the region lost about 215,000 people a year ago.
This highlights a broader shift in U.S. population growth. Areas that had seen mass out-migration in the aftermath of the pandemic have started to see growth trends revert. Breaking down the population growth by county, we can classify every county according to specific density readings put forth by the Brookings Institution and examine the resultant trends. While the far-flung suburbs continue to dominate population growth, we see a significant reversion, which is most acute in the urban cores of America. For the first time since before the pandemic, counties in urban cores stemmed the tide of losses and saw slight nominal growth in population.
What about non-major MSAs?
Much of investors’ attention has been laser focused on the largest metros in the country, which makes sense given the relative exit liquidity as well as opportunities for acquisitions. That said, the abundance of capital—especially for multifamily—has pushed investors beyond primary and secondary markets, leaving opportunities for housing investment in smaller MSAs. Among those markets, Jefferson, Georgia, situated between Atlanta and Athens, was the fastest-growing market in the country in 2023, with a growth rate of 5.5%. Half of the top 10 fastest-growing markets, however, were in Florida, with The Villages and Clewiston (between Palm Beach and Fort Myers) ranking second and third nationally. That’s the same case on a nominal basis, with Lakeland and Fort Myers adding between 20,000 and 30,000 people last year.
Small Metros
What does this mean for CRE?
Population growth is a near-immediate driver of both retail and multifamily growth. Naturally, understanding this dynamic will prove powerful in keeping investors ahead of the curve. Population growth patterns across the country suggest a need to reconsider market selection and challenge outdated perceptions. For example, markets like Jacksonville, which led the country in population growth, has largely been off investors’ radar compared to other fast-growing metros in Florida. Additionally, core markets like New York, Chicago and Los Angeles, have seen a tide of negative press change investors’ perception of those markets. But the narrative is shifting – each of these markets saw significantly fewer people leave compared to any year since the pandemic began, and markets like Washington, D.C. saw net growth in population. The new data also highlights some smaller metros that are showing outsized growth, which is easy to do with a smaller population base. But Markets like Knoxville, Lakeland, and Provo are growing quickly and may soon join the ranks among the larger MSAs in the country.
