Massachusetts Grapples With 'Deeply Concerning' Trend Of More Residents Moving Away

Massachusetts continues to lose residents at a higher rate than almost any state in the nation. 

This trend, driven by high housing costs and industry competition from other states, has accelerated in recent years, and officials have begun making efforts to retain people and preserve the state's economic future. 

Massachusetts was the 49th-ranked state for growth last year, according to a January U-Haul study that tracked move-ins and move-outs. A United Van Lines report put it among the seven states with the most net out-migration in 2023, with 56% of the state's moves being outbound. 

As more residents move out of the state, officials and commercial real estate executives worry about its impacts on the workforce and, as a result, on the level of demand for new development. The issue has become a priority, with the governor advancing several new policies and laws aimed at retaining talent. 

"Out-migration is deeply concerning for employers," NAIOP Massachusetts CEO Tamara Small said. "When you look at those people aged 25 to 34, that's the future of our workforce. Those are the recent college graduates. If they're gone, our workforce will continue to get older and to shrink."

Small is part of Gov. Maura Healey's Economic Development Planning Council, a state group that provides policy input and oversight for the next four years. The council was established in May, and since then, Small said the biggest concern it has heard from business owners has been about residents leaving the state.

Although out-migration has been an issue in Massachusetts for years, the trend has become more persistent since the onset of the pandemic.

In 2020, 26-to-35-year-old residents did the most moving out, with almost 38,000 leaving the state, according to a UMass Donahue Institute report. Between 2020 and 2022, Massachusetts lost 100,000 residents, while neighboring states Vermont and Maine gained more than 30,000. 

Massachusetts Secretary of Economic Development Yvonne Hao didn't respond to requests for comment for this story. 

The economic sectors that have been impacted the most by these out-migration trends have been professional and business service firms like finance, tech and insurance, as well as emerging fields in tech and biomanufacturing, Small said. 

As these workers move, it could mean less demand for development in all sectors, as employers wouldn't need as much space or would move out of the state to follow the workforce.

"If the commercial developers see that there is uncertainty in the market, that perhaps companies are not necessarily planning to grow here or they might be looking to relocate elsewhere, you're not going to see development, which is rational, right there, responding to the larger trends," ULI Boston/New England Director Catherine Rollins said. 

Greater Boston Real Estate Board CEO Greg Vasil said the threat isn't new to the state, with a similar dynamic occurring in the 1990s under then-Gov. Bill Weld.

The last time the state lost more people than 2022, when its net out-migration was roughly 57,000 residents, was in 1991, which saw almost 60,000 residents leave, according to the UMass Donahue Institute.

"We were constantly competing against Research Triangle Park, down in North Carolina, for some of our life science stuff, because it was cheaper to live down there," Vasil said of the 1990s.

In the last quarter of 2023, Massachusetts' economy grew at a slower pace than the national economy, recording a 1.2% rate compared to a 3.3% increase nationally, the Boston Globe reported. The biggest reasons for the slowdown were the constrained labor market, housing supply and high interest rates.

"​​For the first time in a very long time, we've seen the commonwealth's revenues decline month after month," Vasil said.

North Carolina is a growing competitor to Massachusetts, as its biomanufacturing economy is expanding with support from Boston-based developers that have found it easier and cheaper to build in the Tar Heel State.

Stacked with top research universities, more developable land and lower costs, Raleigh, North Carolina, has attracted both developers and life sciences companies looking to grow their drugmaking operations, the Boston Globe reported earlier this month. The region was named the No. 1 biomanufacturing market in the country by JLL.

The North Carolina region also has a cheaper housing stock that has attracted talent to the area. The January U-Haul report ranked North Carolina as the No. 3 state for growth. 

Jennifer Schultz, a partner at law firm Sullivan & Worcester, said the majority of the concern lies within the human capital that could be lost in the state's major and emerging industries like life sciences, clean tech and tough tech.

Schultz, who represents market-rate and affordable housing developers, said there hasn't been any multifamily development activity in the market because costs have been so high, and this out-migration trend has added to the problem.

"My real concern is in the confluence between housing and the life sciences and tech industry — tech, including climate tech, clean tech," Schultz said. "Those are moving across each other in opposite directions on any diagram."

At least three Massachusetts companies have advanced out-of-state projects over the last year: Woburn-based Boston Metal landed a $50M federal grant for a factory in West Virginia, Burlington-based Nth Cycle opened a nickel and cobalt factory in Ohio, and Westborough-based Ascend Elements has begun construction on a $1B battery factory in Kentucky. 

As part of Healey's economic development plan, she has taken steps to invest in these emerging tech sectors that have begun to expand in other states.

To meet the state's clean energy goals by 2030, its workforce will need to grow by an additional 29,700 workers, according to a needs assessment done by the Massachusetts Clean Energy Center. However, the center has begun to address concerns over the labor shortage in the market that could threaten the sector, WBUR reported.

Demand to lease new life sciences space has continued to cool, but the sector is still seeing employment growth, with an anticipated 40,000 new jobs this year as new life sciences space comes online, according to MassBio's Life Sciences Workforce Analysis report. Schultz says that at this rate of growth, without the human capital, this could spell trouble for the market.

Schultz said that the issue lies within the housing — or lack thereof — that the state provides for the bulk of its workforce: those earning incomes well above the affordable housing threshold but not enough to comfortably afford market-rate rent.

Bryan Vitale, senior vice president of strategy & investments at Massachusetts development firm the Procopio Cos., said he has seen out-migration accelerate in recent years due to the pandemic-spurred remote work trend. The company has seen increased interest in its developments in other Northeast states like Maine and New Hampshire.

"Of course, another contributing factor is interest rates, and the general cost of living, as housing costs in Greater Boston in particular have increased in recent years," Vitale said in an emailed statement.

"Areas like the research triangle in North Carolina as well as Austin TX have truly benefited from this trend," he added. "As those cities have seen growth in residents, there has been further growth of businesses in these regions as business needs follow workforces, and this, in turn, drives a greater growth in residents, and a greater need for housing in those locations."

Healey has made it a priority to address these out-migration concerns and enhance the state's competitiveness.

The governor has put forth several initiatives and proposed bills to keep the state competitive, including the $4B Affordable Homes Act, which has some policies and initiatives that could add housing in the coming decade. 

The state is also implementing the MBTA Communities Act, which brought zoning changes for 12 cities and towns that were designated as "rapid transit" communities and had Dec. 31 deadlines.

Rollins said these initiatives are indicators that employers and developers are paying attention to, but as the housing shortage persists, more people will move to cheaper regions of the country.

"I do think that as we really hit a crisis point with the housing shortage, in particular, in Massachusetts, you're seeing more of it or it might become more noticeable," Rollins said.

As she continues to talk with commercial real estate professionals and collaborate with the state, Small said she is optimistic about the future of Massachusetts' economy.

"I think making sure that as much collaboration as possible is happening and that the commercial real estate industry is on its toes and ready to pivot and innovate to respond to challenges and opportunities," Small said. "If Massachusetts thrives, then the commercial real estate industry will thrive as well."

CORRECTION, FEB. 14, 10:40 A.M. ET: A previous version of this story misspelled Bryan Vitale's name. The story has been updated.