Return to the Suburbs

Like generations of Brooklynites before him, Leif Gebauer figured he’d one day be moving out of New York City. “Brooklyn has been good for me, an incredibly dynamic place,” said Gebauer, who toils as a photographer for the Museum of Modern Art (MoMA) and has lived in Brooklyn for nearly 15 years.

“When you work in Manhattan, it’s nice to come back to a place like Brooklyn that is much less frenetic and 20 degrees more chill, culturally,” he added.

With the birth of a son, Henry, in 2015, Gebauer and his partner, Andrea, knew that moving day was most likely growing closer. “We never really had a five-year plan, though,” he said. “Just a sense that we’d move somewhere else eventually.”

So, when the coronavirus hit New York with a body blow in March, their departure leapt from a back burner to the forefront. “We certainly aren’t rich, so we didn’t have a place in the Hamptons to escape to,” he quipped.

The couple initially began working from home. Soon thousands of other Americans in densely packed cities were packing their bags and heading for the suburbs or rural areas nearby — if they were able to work remotely — some even moving hundreds and even thousands of miles away. For many, it is temporary. For others, these relocations may well be permanent.

Gebauer and his family decamped in April for Madison, Wis., where he had moved at age 10 and where his mother and a sister still live. “Relocating was probably always in the works, but the pandemic certainly expedited things,” he said.

“We stayed in Madison for four-and-one-half months before returning to Brooklyn. But now we plan to move to Madison in January and do adult things like buy a house and build some equity,” he added with a chuckle.

Migration From Cities

Joel Kotkin, a professor at Chapman University in Orange County, Calif., said Americans have long been a restless population — mainly moving out of big cities into suburbia and beyond. But he said the pandemic has accelerated the desire to pull up stakes and relocate for many.

“The trend of moving out of expensive cities to metro areas and regions with more reasonable housing prices had been speeding up before the coronavirus arrived,” he said. “But the pandemic and the ability to work remotely from home is really altering things. It totally changes where you have to live.”

Even after the pandemic ends and a coronavirus vaccine is widely available, he said upwards of 20 percent of the population may no longer have to commute to offices. Before the pandemic, he estimated only 6 percent worked from home.

Twenty percent of the population may no longer have to commute to offices.

“If it is indeed 20 percent, that’s a huge number,” he said. [In August, the U.S. workforce totaled 141 million, which means more than 28 million people would be working from home.]

“Of course, essential workers will still have to go into their places of employment. But we’ll get a major dispersion of people. With a computer and a good internet connection, you could live in a nice suburb or on a farm.”

Kotkin said studies during the past half-century show that most people over the age of 30 would like to live in a single-family house, a preference that hasn’t changed. “Some, of course, prefer higher density and that figure is about 15 percent,” he said. “But if people have the choice, most millennials would move to where it’s more affordable, where they are closer to the things they like to do and, if they have kids, bigger yards, good schools and safe neighborhoods.”

He said big cities have become less attractive in recent years not only due to high prices, but because of homelessness and other issues. This summer’s demonstrations, clashes with authorities and riots sparked by systemic racism and police shootings of Black people have made them even less desirable.

At the same time, he said suburbs and smaller cities have become more enticing as educated millennials and immigrants moved there and brought urban amenities with them. “They have developed nice downtowns with good restaurants, coffee shops, walkable neighborhoods, art museums and other cultural attractions,” he said. “As millennials get into their 30s and 40s, especially if they have kids, a lot of them want what their parents had, but with the things they enjoyed in urban areas, too.”

Suburbs and smaller cities have become more enticing as millennials brought urban amenities with them.

Gebauer, at age 42, certainly fits into that cohort. And he said he found Madison — home to the University of Wisconsin — more interesting than it was when he was a teen.

“That four-and-one-half-month period in Madison convinced us,” he said. “That was the longest I’d been away from New York in 14 years. So, it was an epiphany that there is a high quality of life that is available to you outside New York.”

“I’m from the Midwest, so things are easier for me in Madison. Especially with access to family. It would never have been possible for us to own a house in New York City. In Brooklyn, we’re paying $3,000 a month for a two-bedroom apartment. That’s a significant mortgage payment in many places.”

Gebauer isn’t certain if he’ll be able to continue to work for MoMA doing post-production on the museum’s photographs after he makes his second move to Madison. But he’s already signed on to teach two photography classes for Madison College in the spring.

Mid-Size Cities to Smaller Suburbs

Michelle Possin, a corporate recruiter for Madison-based Total Administrative Service Corp., (TASC) also was on the move earlier this year because of the pandemic. She relocated from Madison to Lake Wisconsin, which is about 45 miles north of Madison, the state’s capital.

She’d already reduced her in-office time to three days a week before the pandemic hit. Possin and her husband, a retired hospital administrator, lived in a condominium not far from her office.

Possin, 54, said it had long been her desire to live in the country, but she didn’t want to commute. A native Texan who had lived in the San Francisco Bay Area, she was especially leery of driving to work on icy rural roads during Wisconsin’s cold and snowy winters. She also was worried about hitting a deer.

Possin, who has been with TASC for six years, said she began working from home full-time in mid-March and found her condo confining, not terribly conducive to quarantining. It wasn’t long before she and her husband bought a half-acre property with a house that boasted a lakefront.
 
“It offered us a safe space where we could also get out and about when we wanted,” she said. “Likewise, my husband is quite happy taking care of our big yard and garden. In fact, he gardens all day.”

Possin acknowledged that her productivity may have suffered a wee bit, but she said she has no plans to return to working in an office. “I did like being able to stop by a colleague’s desk and ask a question, though,” she said.

As millennials age and have kids, a lot of them want what their parents had.

“But even after we get a vaccine … I figure there will be another pandemic down the road that will mean we’ll need to work remotely and quarantine. I honestly don’t think this will be the last one we’ll see.”

And Possin said she is convinced working remotely will be the new normal for many people. “I’m a recruiter and TASC has always been a remote-friendly workplace,” she said. “I’d say 50 percent of our employees work away from the office. In fact, my sales pitch to candidates often emphasizes that they can work where they want and when they are most productive. They can start at 5 a.m., go for a long run mid-day — as long as they get their tasks done — figure out their own biological and mental best times to work.

the pandemic has increased the demand by homebuyers for dwellings in less-dense neighborhoods.

“That means they could be in a cabin in Montana or an outdoorsy town in Colorado. All they need is a computer and a strong internet. If they have that, they can live anywhere.”

Jessica Lautz, vice president of research for the NATIONAL ASSOCIATION OF REALTORS® (NAR), agreed, and said recent NAR polling shows that the pandemic has increased the demand by homebuyers for dwellings in less-dense neighborhoods. See NAR's Market Recovery Survey.

“We’ve been doing both consumer research and NAR member research,” she said. “About a quarter of members are working with buyers who have come back into the market and have changed the location where they’d like to live. The vast majority are now looking at small towns, rural areas and outer suburbs, which is driving up prices there.”

Cities like Boise, Idaho, continue to be in strong demand, she said, because of good broadband and access to the outdoor recreational activities.

“The pandemic has accelerated this trend,” she said. “Many buyers want not only a less-dense neighborhood, but yard space and personal space within their homes. The poll showed that 35 percent of members are working with buyers who have changed what they are looking for in a home. They now want room for a home office, a yard in which they can exercise and even space where they can accommodate older adult relatives.”

She said buyers from bigger cities are considering places like St. Louis and Kansas City, if they can find the right dwelling.

Lautz said this shows people continue to have a strong desire to live in dynamic urban areas.  Likewise, they desire those same amenities when they move to the suburbs.

Moving to the “Suburbs” of California

Jared Pastega, who works for the CLIF Bar company in California as a customer marketing manager, has long considered himself an “Oregonian at heart.”

But for nearly five years, he’s been living in the Haight neighborhood of San Francisco with roommates and working in the CLIF offices in Emeryville, a 13-mile commute across the San Francisco-Oakland Bay Bridge. When his office closed in mid-March because of the pandemic, he began working at home.

“I loved living in San Francisco right up until COVID,” said Pastega, 38. “But when they closed the Emeryville office, I quickly communicated with my manager and asked if initially I could work from Bend, Ore., because I had a place to stay here. Two weeks led to two months and here we are today in mid-September. The last we heard was that our offices probably wouldn’t reopen until Jan. 1.”

Pastega grew up in Corvallis on the west side of the Cascades and moved to Bend at age 22 to work for the REI outdoors company. He continues to have family and friends who live in the area. Before the CLIF job, he worked in field sales for several food companies for 15 years. And in many of those jobs he worked remotely. Even with his CLIF post, he could go to Bend for several weeks at a time. He’s now renting a friend’s Airbnb space just a stone’s throw from a neighborhood that has coffee shops, restaurants and brewpubs that he likes to frequent.

With today’s technology, working remotely is totally doable for many people.

Pastega said he’s not alone in his move from California to Bend. “I have friends who are REALTORS® and they tell me there is a flood of people from the Bay Area moving here, which is driving up home prices a lot. If you’re no longer wedded to an office and you love the outdoors, why not?”

He said working remotely is a breeze for him. “I’m used to managing my time, making sure I get my work done. But I had roommates in San Francisco who were having a bit of a hard time. They found it too appealing to go play. They needed an office to motivate them and avoid distractions. For me, though, I’ve always been held to a sales number.”

Pastega isn’t sure if he will move back to the Bay Area when CLIF’s offices reopen. If he stays in Oregon and buys a house, he said he might have to switch jobs with the company. “My current post has a lot cross-functional partners,” he said. “And while Zoom is fine now, it’s a position they want you in close with. I’m working with the marketing department, production team and supply and demand planning team, our finance team and other entities across the entire company. It’s nice to just stop by someone’s desk and have an improv meeting.

“With today’s technology, working remotely is totally doable for many people,” he said. “So, who knows? I’d love to stay. CLIF doesn’t produce any bars there, but it has 450 employees in its Emeryville office. I don’t know if they’ll all need to return.”

As for the thousands who have fled Google and Facebook’s giant campuses in the San Francisco Bay Area to places like Bend, but still own homes in California, he thinks many will move back.

“Maybe this is their new life and the transition wasn’t a problem,” he said. “But I can’t believe that Google and Facebook will shutter their campuses. And you have to take into account the families that just want things to return to normal. For them, this whole pandemic thing has probably been a nightmare because they have to work and manage their kids’ education, too. Before, they could drop them off at school and say ‘I’ll see you at 3 p.m.’

“For me, though, things are going well, so working from a distance here is a dream,” he said.

The New Work Spaces

Gay Cororaton — an NAR research economist — said the pandemic has depressed values on the commercial side.

“The impact has been uneven, with hotel/lodging and retail real estate hit the hardest,” she said, citing the Commercial Market Insights study released in September.

“Sales and leasing in the office property market has also collapsed with a high fraction of workers still working from home. Companies are still making calculations on office density, staggering of the workforce schedule, and [figuring out] whether it makes sense to invest more in headquarter central business district office space than suburban satellite offices.

E-commerce sales are increasing the demand for warehouses.

“I think the office sector is facing the most uncertainty because of so many parts to consider — office space cost, employee work from home preference, effect of work from home on productivity culture, etc.

“Less impacted has been the industrial property market because e-commerce sales are increasing the demand for warehouses.”

She said the commercial market should continue to heal as economy gains strength, but 11.5 million lost jobs still need to be recovered, with three job seekers per job opening. “So, vacancies will remain elevated for at least in 2021,” she concluded.

Veronica Malolos is a commercial real estate broker based in Orlando, Fla., and 2020 chair of NAR’s Smart Growth Advisory Board. As have millions of other Americans, she’s been working from home for the past six-plus months. “I’m like a lot of people who haven’t been in their regular offices much since March,” said Malolos, who is the managing broker/principal at the Capital Stack Real Estate Group.

“Many offices are only open for the purpose of accepting mail, or in case someone simply walks in,” said Malolos, who also chairs the Osceola County Planning Commission. “Perhaps the office manager is there, or maybe the CEO of the company or someone whose specialized work requires their presence. The rest of those offices are empty.”

Some companies are considering leaving their urban, central business district headquarters and
dispersing employees to suburban satellite offices.

Malolos said she participated in a recent meeting with real estate brokers. “Most expressed the sentiment that they are going to have to scale down their office size by as much as 50 percent because of the impacts of the pandemic,” she said.

She said some companies are considering leaving their urban, central business district headquarters and dispersing employees to suburban satellite offices. “That way, workers could drop in a couple of times a week if they need to, but continue to work mostly from home. Employees like that in many cases, because they don’t have to take the subway, ride a bus or commute to downtowns to work.

“With managers finding out that their employees are just as productive working from home, the need for all the office space is diminished.”

On a personal scale, Malolos said she and her husband are trying to figure out how much space they’ll need in the future for the auto repair and body shop they own. “Business is slow — perhaps reduced by half — because there are fewer cars on the road now because of the pandemic,” she said. “We rent around 3,500 square feet of space in an industrial area and are looking at scaling back. People still need to maintain their vehicles, of course, but things are different now.”