The COVID-19 pandemic has resulted in many behavioral changes, not the least of which is the acceleration of the work-from-home trend. As the location of many workplaces remains flexible, there’s been a shift in the nature of work, its location and employment implications. Commercial real estate investment firm Graceada Partners has identified this trend and defined it, referring to it in a new report as the “outpost economy.”
The outpost economy is defined as the rise of a more dispersed economy and employment base away from major cities, to smaller cities with a high quality of life that draws workers who have become untethered from their offices in major cities. Clearly, this has implications for the real estate market – on both primary markets, as corporate headquarters become decentralized, and on secondary markets, as they evolve into “outpost economies.”
Takeaways from the Graceada report include:
- Prior to COVID-19, many workers built their lives around the cities where they were employed. But, today, Millennials and younger workers are nesting, focusing on purchasing homes in smaller cities or suburbs and growing families there. The pandemic has enabled them to do this due to greater acceptance of remote working.
- Still, the office is not dead. Many remote workers have already returned to the office, and offices are migration evolving as well. Employers may end up leasing smaller spaces in secondary markets to allow employees in those areas to work from those hubs.
- Three outposts singled out in the report are Austin, Charlotte and Sacramento.
- Despite the rise of many outposts, primary markets like New York and San Francisco have been economic hubs for major industries for many years and aren’t expected to go away overnight.