More SF Workers Pull Away While NYC Retains 'Center of Orbit' Role

Less people are migrating away from states that have been particularly hard-hit by the pandemic—but the path to recovery for large coastal metros like New York City and San Francisco won’t be one-size-fits-all.

New York and California posted population decreases just 2.5% and 2.0% from May 2019 to May 2021, in what Placer.ai analysts call “a limited loss considering a wider narrative that suggested potentially major swings.” But at the same time, major metros like New York City and San Francisco have posted decreases month over month this year. And in San Francisco in particular, more residents decamped for cities like New York, Phoenix, Seattle and Austin than came from those areas. 

The implications for the Bay Area, according to Placer.ai’s Ethan Chernofsky, could be big. 

“While these are not massive population shifts, even small changes in a highly competitive professional market like San Francisco can be hugely significant,” he writes in a recent analysis of May 2021 net migration data. “The spread of potentially high-skilled professionals who are in ever increasing demand may create opportunities for businesses centered in these other cities or add further fuel to a growing ‘work from anywhere’ trend. Whether this change cements the shift to work from home, opens opportunities for flexible co-working models, or gives rise to more hub-and-spoke office spaces—the effects on the office and retail sector could be massive.”

But in New York, things look sunnier. Placer.ai data suggests that a drop in rental prices thanks to COVID-19 likely brought those living in New York City’s outer boroughs into the heart of Manhattan.

“This change, even if only slight, could have major implications for retail, and actually deepen a city like New York’s role as a ‘center of orbit’,” Chernofsky writes. “The data suggests that much of the situation in New York should be seen more as a shake up of residential mixes than a fundamental long term change.”

Meanwhile, states like Arizona and Florida continued to be popular destinations for workers decamping from larger coastal MSAs. The states saw respective increases of 1.3% and 2.6% respectively in May when compared to 2019 numbers, and out west, Montana registered a 5.4% gain. And while there are likely several reasons for this (including retiring baby boomers), “the work-from-anywhere impact cannot be discounted, especially considering where much of the movement is coming from,” according to Chernofsky.

And it also appears that the shift to cities like Tampa, Phoenix, and Austin may have some staying power: all of those regions saw net population increases in March, April, and May when compared to 2019 figures, and all registered improvements month to month.