The mass exodus from dense urban populations was an unexpected outcome of the pandemic, with most outbound moves impacting northern states. Unsurprisingly the Sun Belt, where most cities have lower population densities and warmer temperatures, benefits most. Suburban areas in these locations experienced an influx of people seeking more space for their dollar and a better quality of life, among other incentives. Residents have recreated an urban lifestyle in their new hometowns, and companies that practice a similar resilience strategy are likely to survive the economic rebuild. According to Moody’s Analytics REIS, they might not have to wait that long. After the U.S. economy’s 6.4% growth in Q1 2021, businesses are positioned to bounce back.
An increasing number of tech startups are choosing smaller cities and towns to plant roots. Cities like Austin, TX; Denver, CO; and Charlotte, NC – are our top picks that will benefit from the growth as the country comes back to life.
Austin, TX: Texas’ state capitol offers several incentives to businesses, including the absence of a corporate income tax. An inviting prospect for Oracle, which decided to establish and move its headquarters from the Bay Area to Austin and Elon Musk’s 2021 expansion plans to build Tesla’s Texas Gigafactory in Austin. The city itself is undergoing recovery with 9.2 million square feet of real estate under construction, in addition to the 19 million feet of planned space in play. As an example, speech-to-text service Rev.com recently expanded its Austin-based workforce with an additional 1,641 square feet of office space.
Denver, CO: Denver, one of six favorite boomtowns, is attracting a younger workforce for its lower cost of living and capacity for higher-than-average population growth. Datadog Inc.’s cloud monitoring service is banking on that after choosing Denver for its new Western U.S. hub, a move that will bring more than 400 jobs to the region. Grounding itself as Silicon Mountain, a tech hub status Denver shares with neighboring Colorado Springs, the sector entices many companies, including Amazon, to make a move.
Charlotte, NC: Charlotte’s population increased by nearly 2% in 2021 and has seen a 17% increase in demand for tech jobs. Queen City reigns supreme for financial and tech companies, with Credit Karma investing $13 million in establishing Charlotte as its East Coast headquarters. Ally Financial Services’ bank tower officially opened last month. In addition to their office, the building features 750,000 square feet of office space, around 30,000 square feet of ground-floor retail, a 1,400-space parking garage and a public plaza. Trading platform Robinhood will also be opening an outpost in Charlotte.
About that Boom: Upcoming Retail Expansions
As companies awaken to the idea of meeting consumers where they are, we anticipate an increase in retail openings and concepts to attract residents. Dodge Data’s forecast for the South concurs, expecting retail construction to pick up in the next two years. Earlier this year, we shared Sprouts Farmers Market Southern expansion plans–a trend that is replicating across all categories. Activewear retailer Fabletics has plans to open 74 stores in 2021, including several outposts in Alabama, Arizona, Kansas, Texas and Virginia. And America’s favorite big-box retailer, Costco, plans to open three new locations in Tennessee, Arkansas and Oklahoma this summer. We do not doubt that the best of the rest is yet to come.