The New New South

A recent article published by Bloomberg highlights the vast wealth migration to the southern states over the last two years.

In recent decades, the South has reinvented itself economically, politically, and socially. The warm weather, lower taxes, and favorable regulatory policies all contributed to massive growth over the last five years, but the appeal doesn’t end there. The 240-mile stretch from South Carolina down into northern Florida is home to one of the most prominent economic shifts in the United States today… and the numbers speak for themselves.

This stretch of land along the Atlantic Coast is known as the New New South, and it is experiencing growth like never before. In the last two years, over 2.2 million people moved to the Southeast states. Sparked during the pandemic, these regions have shifted into economic powerhouses and show no signs of reverting. But what factors provoked this shift?

The South is often recognized geographically for its open plains and vast forests. However, in recent years, capitalizing upon the abundant developable land and favorable regulatory conditions, operators of electric-vehicle factories and battery plants have acquired vast swaths. According to CoStar data, automakers are in a hurry to develop an increasing number of electric vehicle and battery plants, with at least $65 billion in announced projects. And it is important to note that the southern states have developed into the desired location for these plants. Thus, businesses are relocating to the area, employment is growing, and the demand for housing is rising quickly.

This uplift has an enormous impact on the entire country, and especially on real estate. Electric vehicle and battery plant projects are just initial investments. Considering the future success of the area is crucial. Typically, manufacturing centers do not stand alone, as other industries seek to locate near to these plants. Suppliers, vendors, service firms, financial resources, etc. all build up a larger cluster of economic activity, and over time, this has the possibility to create a positive cycle of investment.

Since early 2020, the Southeast has accounted for more than two-thirds of all job growth across the U.S. With corporations pouring into the area, and a record number of firms relocating post-pandemic, the New New South is now home to 10 of the 15 fastest-growing American cities. Among those top 10 moving destinations are Houston, Atlanta, and Charlotte, all markets in which HZ currently owns assets.

For the first time ever, Florida, Texas, Georgia, the Carolinas and Tennessee are contributing more to the national GDP than the Washington-New York-Boston corridor. The influx of transplants contributed to the $100 billion in income to the Southeast in the 2020-2021 period. In comparison, according to Internal Revenue Service data, the Northeast suffered about a $60 billion decrease.

“You could throw a dart anywhere at a map of the South and hit somewhere booming,” said Mark Vitner, head of Piedmont Crescent Capital in Charlotte, North Carolina.

According to Price Waterhouse Coopers and Urban Land Institute, Nashville has become the country’s top real estate “supernova”.  The city has seen the lowest unemployment rate for several years, supporting the real estate market demand. HZ currently owns 865 Bellevue Apartments, Rivertop Apartments, Retreat at Arden Village, Springfield Apartments, and Post Ridge Apartments in the Nashville market. In the coming weeks, Hamilton Zanze will close on another property, Cantare at Indian Lake Village, just outside of the city.

Charleston, South Carolina is also showing signs of explosive growth. Charleston is known for its 350-year rich history, beautiful coastlines, and developing neighborhoods. Employment in the metro grew by 5.9% in 2022, twice the U.S. average. Redwood Materials, drawn in by the low property taxes, is now building a $3.5 billion electric-vehicle plant outside of Charleston. While HZ does not currently own property in the Charleston market, it remains a positive potential market and is certainly something to keep an eye on in the following years.

While the New New South is taking large transformational strides economically, some are hesitant to reside here due to the ever-present prominent political ideologies. The South is known for its conservative slant on issues, such as reproductive and LGBTQ rights, in contrary to most other US regions that are focusing on reformation and political progress. Additionally, racial inequalities run much deeper in this area. Even currently, life in the New New South tends to be poorer and shorter for the Black community. This could be considered a long-term risk for the area, as some groups may avoid investing in or relocating to states where their beliefs do not align. However, as of now, there is no evidence that has suggested that politics have slowed the flow of migration.