You may have noticed a general increase in commercial real estate investment options in Rio Grande Valley. That increase is neither a coincidence nor temporary. Commercial real estate investment has increasingly started shifting towards red states, changing the market norm that had formed over several decades.

As your commercial real estate broker, CHRE will always remain updated about the trends and guide you accordingly. However, understanding the reasons for such shifts will also deepen your understanding and help you structure your portfolio.

This blog will analyze the shift and explain how it has affected commercial real estate investment in Rio Grande Valley.

Why Commercial Real Estate Investment Is Moving to the Red States

While the discussion over this shift has recently gained attention, the trend itself has spanned several years. Following are core reasons why commercial real estate investments are going red.

1. Politics and Policies

Politics affects policies, which go on to affect investment. There has been an increase in the negative sentiment in blue states against capitalism at a governmental level. This sentiment has started becoming apparent through policies that have increased the general costs of running a business.

The higher costs have discouraged commercial activity, thus lowering the return on investment. As a result, a significant percentage of commercial real estate investors and commercial businesses have shifted their focus towards capitalism-friendly red states.

2. Job Growth

Job growth trends leaned more favorably towards red states when COVID-19 hit, and the pandemic further increased the gap. Red states had an impressive 14.5% job growth between 2006 and 2019, while the blue states’ job growth was 8.6% for the same timeframe.

Since blue states also had lengthier lockdowns, they saw sharper declines in unemployment, their job losses coming down to -7.3%, while red states remained at -2.3%.

Commercial real estate typically fares better in states with higher job growth and commercial activity; hence, the investment has shifted red.

3. Stable Costs of Living

In the past few years, the cost of living has been more stable in red states, especially Texas, encouraging people to move away from the more expensive cities and states they are residing in. 830,000 residents moved away from California and New York, while Florida and Texas welcomed more than 474,000 people between April 2020 and July 2021.

This residential shift has affected commercial activity, leading red states to gain investor confidence.

How this Movement has Affected Rio Grande Valley

Rio Grande Valley is located in the southern-most part of Texas and has always been considered a lucrative location for commercial real estate investment. The recent shift has boosted confidence in its potential, and several promising commercial real estate projects are available for investments in the region.

Final Thoughts

In short, policies, job growth, and population shifts are primary reasons for commercial real estate investment moving from blue states to red states.

If you want to invest in commercial real estate in Rio Grande Valley, please get in touch with the CHRE team. We have worked in the region for several years and can help you choose the most suitable investments for your portfolio.