Historically, recent college students have centered their post-grad lives on landing a job in big cities like New York City and Los Angeles that promise a lively lifestyle and often higher starting salaries (although the high cost of living quickly eats into that).
Still, New York City claimed the No. 1 spot, followed by the San Francisco Bay area, Los Angeles, Boston, and Chicago. Some of that can be attributed to the concentration of university students nationally, according to JLL. While Texas and Florida boast the third- and fourth-highest concentrations of college students, the Sun belt houses 143,000 students, compared to 174,000 in Midwest states and more than 282,000 students on the East Coast, JLL reported.
While there might be plenty of job opportunities in these two states, recent grads still make relatively less than “gateway markets” like New York City and San Francisco.
“For instance, a company shifting tech headcount from the Bay Area to Austin can procure talent for 15-20% lower salaries,” Rowden said. “A company relocating finance headcount from the tri-state area to Dallas-Fort Worth would see about 10-15% savings.”
But that hasn’t stopped new grads from moving there anyway.
“Seeing elevated talent migration to those areas, and now a growing pipeline of college graduates from university expansions, adds to the legitimacy and permanence of that momentum for office markets,” Rowden said.
And the story is very different in Texas, Rowden said.
“While you do have some cities [in Texas] where demographic momentum has outpaced new development and rents are growing quickly, it’s a significantly more affordable state from a housing and rent perspective,” he said.
It’s also important to remember Florida and Texas both do not have a state income tax, so that “contributes substantially to general affordability,” he added. “State income taxes reduce the typical graduate’s buying power by about 5% in gateway markets excluding Seattle.”
