It’s Not Just Florida, Southeast Region Leads the Nation in Key Growth Metrics
The Southeast has been the national darling for demographic, economic and commercial real estate growth in recent years, outpacing the country in multiple metrics.
Over the past decade, the U.S. population increased 5.8 percent. The Southeast — a 10-state region featuring Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee — meanwhile, grew 8.8 percent in that same time. In fact, more than 34 percent of the nation’s population increases occurred within the Southeast, with an influx of 6.2 million people driving the regional population to nearly 76.8 million at the end of 2022.
The continuous stream of in-migration to the Southeast — and to Florida in particular — accelerated dramatically following the onset of COVID-19. Through 2021 and 2022, Florida was far and away the largest recipient of in-migration in the U.S. with an estimated net migration total of nearly 842,000 people. Three of the nation’s top five net migration winners were Southeastern states, including North Carolina (No. 3) with 255,000 and Georgia (No. 5) with 166,600 net new residents via migration. Texas at No. 2 and Arizona at No. 4 rounded out the top five.
Regional nonfarm employment grew by 1.2 million jobs over the past year alone and by 5.6 million jobs since its low point in April 2020, a 20 percent increase since the trough. Florida’s nonfarm employment total climbed 23.9 percent in that time, the strongest performance in the region and fourth-highest increase in the nation. Following the record-breaking pandemic-induced job losses, the recovery of employment fundamentals was unbalanced throughout the country. The Southeast rebounded rapidly, returning to its pre-COVID employment total in November 2021, but the national figure lagged by nearly a year, recovering the total jobs lost in October 2022.
As the population of the Southeast increased, so did its educational pipeline. In 2021 there were 1.1 million college graduates across the 10 Southeast states; this pipeline has grown by 7 percent over the last five years compared to 5 percent growth across the U.S. The rise in college graduates was even more pronounced in Florida, where degree recipients increased by 8 percent in the same span. The highest share of these Southeast students graduated with degrees in liberal arts, nursing, and business administration and management.
The commercial real estate market continued a strong performance across the Southeast to accommodate its growing population, despite national economic headwinds.
Among open job opportunities that employers are actively seeking to fill, the most in-demand skill across Florida is nursing, with job postings for this specialized occupation far exceeding the national average by 15.7 percent. Statewide employment in ambulatory health care services — including offices of physicians, dentists, and medical and diagnostic laboratories — reflected this rise in demand when it reached a historic high at the end of 2022 with 592,400 jobs, an increase of 16 percent over a five-year period. Florida’s hospital and medical office building (MOB) sector continues to flourish, keeping pace with the medical needs of the state’s growing population. Nearly 245,000 square feet of MOB space was absorbed in South Florida in 2022, while Tampa’s and Orlando’s vacancy rates each decreased to below 6 percent to meet the demand for medical office facilities.
Smaller office markets with strong job growth recorded positive annual absorption in 2022, and the most notable of these on a national scale were concentrated in the Southeast: Palm Beach, Fla.; Charleston, SC; Jacksonville, Fla.; Nashville, Tenn.; and Greenville, SC.
However, overall, the national office market softened in the second half of 2022, bringing U.S. annual net absorption down to -37.1 million square feet for the year. While only 10 U.S. markets had six-figure positive absorption in the fourth quarter of 2022, half of these were located in the Southeast and three were in Florida: Atlanta (+485,000 square feet), Jacksonville (+431,000 square feet), New Orleans, (+223,000 square feet) Miami (+199,000 square feet), and Palm Beach (+111,000 square feet). Newly constructed or renovated properties housed the most substantial move-ins, including big-name tenants like Emory Healthcare, Novelis and Visa in Atlanta, and utilities company JEA and Treace Medical Concepts in Jacksonville.
The Southeast also experienced an industrial boom to meet the growing demand of the increased populace. A plethora of industries have located to or expanded in the Southeast, driven by a surge in manufacturing, e-commerce and 3PL businesses. The labor pool has increased in tandem with the rise in industrial business. Southeast markets already had a higher concentration of the sector’s target blue-collar demographic than the nation as a whole. The port-centric markets of Savannah and Charleston have some of the lowest industrial vacancy rates in the country. Nearly 102 million square feet of industrial product delivered across the Southeast in 2022 — 21 percent of the national total. Despite the influx of new product, the Florida markets maintained an average of only 3 percent vacancy across the state at year-end 2022, and Jacksonville and Miami had markedly strong performances among newly constructed assets, with stabilization periods of deliveries over the past five years averaging 1.6 quarters and 2.1 quarters, respectively. Looking ahead, the Southeast region is poised to maintain a strong industrial performance even as demand drops from the historical highs of recent years, as evidenced by substantial preleasing in buildings still under construction and sub-3.5 percent vacancy rates in every key market.
Beyond COVID-impacted job recoveries, the Southeast boasted substantial net new job creation in recent years. The warm climate, comparatively low cost of living, and business-friendly policies make states in this region attractive to employers and individuals alike and will continue to drive in-migration. Most major metros in the Southeast have highly diversified economies, allowing for job growth across sectors and insulating the region from some of the more severe economic headwinds facing tech-centric cities. As we head into further economic uncertainty, the Southeast remains well positioned for success, with Florida the tip of the spear.
Christa DiLalo is the director of Southeast research for Cushman & Wakefield (CWK).