A trend that first appeared in 2021 picked up through 2022 and was even stronger in the first quarter of 2023.
There has been a clear movement of people and companies from the North and Midwest to the South, as CRE professionals know. The trend has been building for years, even before the pandemic. And now there are signs that beyond people and companies, money has moved significantly with them, creating a shift in the balance.
Economic activity in the Northeast — which includes Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, according to the Census Bureau — has long been the largest contributor to GDP. But that's changing as well Bloomberg famous.
Historically, the Northeast has put more into the economy than the combined Southern states of Florida, Texas, Georgia, North Carolina, South Carolina, and Tennessee. This is changing a lot before the pandemic.
The Northeast in 2009 contributed 24.3% to the GDP, while the collection of southern states contributed 21.6%. By 2016, the split was 23.8% vs. 22.3%. In 2019 it was 23.4% against 22.7%.
The lines then crossed, as in 2021 the Northeast accounted for 22.7% and the Southern states' collection stood at 23.2%. The trend continued through 2022, closing at 22.4% versus 23.8%.
GlobeSt.com, using data from the US Bureau of Economic Analysis, continued the calculations. Of a total GDC of $26,529,774,000,000, Northeast was responsible for $244,106,000,000 in Q1 2023, or 19.87%. These six southern states reached $270,969,000,000, or 23.64% of total GDP.
The comparisons are not exactly apples to apples because the southern states do not form a continuous group but require the addition of Texas from the southwest. Again, taking the entire Southeast, a group of 12 states, the GDP contribution is 21.8% in the first quarter of 2023.
The point remains that significant amounts of economic power have apparently shifted from the Northeast to the South.
Much of that is due to companies moving in part to get relocation incentive packages, such as the $100 million combination of cash and tax incentives Dun & Bradstreet received to move to Florida, according to the Bloomberg report.
The stimulus game is a challenging one for state and local governments. It often involves companies providing incentives that they may not even need to offer if a company is already planning a move. Packages can have negative effects on local economies and governments, especially when companies do not expect their deals, particularly when it comes to job creation.
But for commercial real estate experts, there is profit in leasing and construction to satisfy the companies and consumers who follow them.
