It wasn't too long ago when urban office markets like New York and San Francisco were among the hottest in the U.S., but times have certainly changed. In this Fool Live video clip, recorded on Sept. 28, Millionacres editor Deidre Woollard and senior analyst Matt Frankel, CFP, discuss the 10 hottest office markets and what this information means to investors.
Deidre Woollard: This chart, it just cracked me up. I've never thought I would see a map that says top office markets of the third quarter of any year that I would see Boise, Omaha, Provo, Daytona Beach. This is just hilarious to me, but it reflects what the impact of migration, remote work, people seeking more affordable housing has really done to the country in the ways that it's remaking it, because people are moving to places, they're working remotely or they're starting companies, and there's not actually enough office space in some of the places that we never really thought we need a lot of office space.
Matt Frankel: Well, one thing to point out just from looking at that chart, a lot of it doesn't surprise me, and I'll tell you why. You remember about six, seven months ago, all these companies started leaving California?
Woollard: Oh, yeah.
Frankel: Where did they go? Texas and Florida.
Woollard: And Boise.
Frankel: And Boise, but a lot of them went to Texas. I want to say a bunch of big tech companies relocated to the Texas markets.
Woollard: Yeah, Oracle (ORCL +2.74%), Hewlett-Packard (HPE +4.28%). Yeah, there's a lot of movement.
Frankel: Right. There's at least one that went to Miami. I'm not sure the name right off the top of my head, but I know at least one went to the Miami area. But the point is a lot of companies are leaving these higher-cost areas. California, it's essentially a tax move. California is an expensive place to have a business. Same with New York and New Jersey and those areas for that matter.
Where are they going? They're going to places like Florida where their employees don't have base state income tax, it's a big draw for an employee. At the same in Texas, there's no state income tax on the individual level. It's just more business-friendly markets, easier to attract employees, and a lot of educated people to join the workforce. I'm not terribly surprised to see those. Myrtle Beach, South Carolina really stands out to me as the head-scratcher there. Because I've been to Myrtle Beach many times, it's about two hours from my house. I'm not sure I've seen an office building there.
Woollard: But that maybe why they need one.
Frankel: I'm sure there are, I just don't notice. We go there for the beach. That's the head-scratcher here. Tennessee, I know it's a big growth market as well. A lot of population flowing into Tennessee right now.
Woollard: Well, one of the things I find fascinating is that the California movement has been different than it used to be. Portland, Oregon used to be where people would go up. Now, people are moving to Phoenix. Phoenix has had an incredible year. They're moving to some extent to Nevada, but they're also moving to Texas. They're moving South. Then a lot of the Florida activity is coming from the Northeast, and particularly from New York. You've got these, from either coast people they're converging on the South in a way that they didn't used to in the same way.
Frankel: Well, companies, they not only want lower taxes, that was a big California thing. I know that Elon Musk said that he wanted somewhere that had comparable weather to California, which is a big factor in Texas. You're also seeing people want to spread out. People are valuing their space more than ever before. That's a big thing in Florida. Florida has a lot of room to spread out, especially when you're coming from Manhattan. You're seeing that as a draw. It's nice weather, lower taxes, more room to spread out, people can become homeowners, whereas in New York, that's not always possible. They're nice markets to attract employees and they're nice markets to run your company in a more economical way. I say I'm not surprised about those. There are a couple of them on that map that have me scratching my head and those aren't them.
