The just-released U.S. Census population estimates of internal migration for the year ending July 1, 2007 paint a clear picture of how regional construction demand will shift in the next few years. Together with the distinctly regional patterns of foreign immigration and natural population increase, these population shifts will set the relative need for housing, public buildings, infrastructure and business facilities once projects now underway or committed are completed.

Largest Population Gains, July 1, 2006 to July 1, 2007
(Table 1 and Map 1)
People vote with their feet when they see an opportunity for a better life elsewhere. People are leaving California, New York, Michigan, New Jersey, Illinois, Ohio and, in lesser numbers, 18 other states and moving to Texas, North Carolina, Georgia, Arizona, South Carolina, Tennessee, Nevada and, in lesser numbers, to 20 other states. Note that Florida is no longer one of the top destinations for internal migrants.

Ten states account for two-thirds of the total U.S. population growth. This list is not likely to change much in the next few years. Florida is on the list because of its large number of foreign immigrants. California is on the list because of its high birth rate and more than double the foreign immigration of any other state, offsetting the highest out-migration of residents among all states.

Texas has a high birth rate and high level of both domestic and foreign immigration. Washington, Arizona and Colorado also have balanced growth from natural increase and from domestic and foreign immigration.

The four southeastern states — Georgia, Tennessee, North Carolina and South Carolina — are on the list primarily for their huge draw on internal immigrants seeking lower living costs and better job opportunities. Each of these states is accumulating a backlog of non-residential building and infrastructure needs that will result in construction starts when funding is available.

Smallest Populations Gains, July 1, 2006 to July 1, 2007
(Table 2 and Map 1)
With respect to smallest population gains, much of the list is familiar from previous years. Michigan and Ohio are the only two large states and periodically make this list during recessions in motor vehicle manufacturing. This time the problem is more serious because the layoffs come from the relocation of auto parts factories to cheaper locations. Furthermore, this has not been accompanied by any decline in motor vehicle purchases, the usual reason for temporary layoffs. Both states are almost certain to make the 2008 list as well.

The other states are small and have little involvement in today’s technology and intellectual-capital growth industries. New Hampshire is an exception. It is on the list due to the recession in its dwindling forest product and machinery industries and a relatively weak Boston economy until near the end of the period.

Largest Out-migration of Domestic Residents, July 1, 2006 to July 1, 2007
(Table 3 and Map 2)
A net of 882,000 people moved last year from states with high costs and relatively few job opportunities. More than half were from California and New York. The rest were from elsewhere in the northeast or the industrial Midwest.

The exodus will slow from the Midwest when the manufacturing recession ends, but will continue from the northeast and California, which have become too expensive for low-wage households. The scale of the domestic flight from these states is being masked by their large number of foreign immigrants, attracted by existing immigrant communities and good opportunities for service industry jobs to cater to the wealthy residents who remain.

While this is a scenario for limited total population growth at best, there is no near-term threat to non-residential construction activity. Wealthy people use a lot of expensive space. Also, the industry mix in California, Illinois and the northeast requires a relatively large amount of office, laboratory and hotel space.

Largest In-migration of Domestic Residents, July 1, 2006 to July 1, 2007
(Table 4 and Map 2)
It is cheaper to live in every state on the in-migration list than in California, Illinois or the northeast. Manufacturers and distributors have been moving operations to these states for a long time, creating jobs that attract new residents. Living costs are now rising faster than the national average in Colorado, Florida and Washington and will soon be in the other seven states. However, it will take a generation for most of these states to be too expensive to attract people from elsewhere in the country.

Washington may be an exception. It is not a cheap state and is now growing rapidly in large part because of the cyclical peak of the aircraft industry, which will begin to ebb in 2008 to 2009. The states on this list are accumulating a backlog of space and facility needs waiting for funding. In contrast to the northeast and much of California, construction will be relatively heavy for additional space rather than replacement or renovation.