Is It Crunch Time for the Moving Industry?

According to USPS data, most people who moved stayed within the general area — 84%, in fact. Just over 7% of people who moved stayed within the state, and fewer than 1% of people left their metro area completely. The moving industry, however, stayed busy. A recent Statista Research report found that the U.S. has almost 18,500 businesses in the moving services industry helping companies and individuals move, with about 7,000 moving companies in particular.

In this segmented market, residential moving comprises just over 70%, warehousing services almost 6%, and commercial moving 11%. Of the items moved, 73% are household items, 20% include electronic office items like computers, copiers, and servers, and 6% are trade shows and exhibits. General industry revenues come from:

  • Moving costs (69.6%)
  • Storage (20.2%)
  • Packing and packaging (7.5%)
  • Miscellaneous (2.7%)

What is the outlook for this market? Currently, it’s continuing to grow, albeit at a slower rate than the transportation and warehousing sectors as well as the overall economy. But all is not lost. The market size, according to revenue, will surpass $19 billion this year growing by almost $2 billion between 2021 and 2026, and its overall size increase almost 2%. What’s affecting the sector’s growth right now is stiff competition and the current housing market.

The moving services industry is 18th among all markets within the transportation and warehouse industry, based on market size — and it’s the 406th largest market in the country. The market has grown an average 1% YOY since 2017, but its growth momentum is projected to accelerate at a CAGR of just over 2% through 2026.

Industry analysts anticipate that the moving services industry will decline over the next five years as the red-hot housing market cools and new construction slows. However, demand may increase from corporate consumers. The industry does, however, face some challenges.

The Vendor Landscape

The U.S. moving market is fragmented. Vendors use organic and inorganic growth strategies to compete. Because more companies have opted to remain virtual or hybrid, more employees are choosing to relocate away from high cost-of-living areas. Many vendors have increased their service offerings as well, including:

  • Specialized packaging
  • White glove packing
  • Elderly and childcare assistance
  • Client awareness programs focused on new locations

A Slowing Real Estate Market

The housing market had been on fire, but with the Federal Reserve raising interest rates five times, including a 0.75 percentage point increase on September 28, 2022, the real estate market may slow. The Fed’s current benchmark interest rates sits between 3% and 3.25% but will likely surpass 4% by the end of the year. While it won’t directly control mortgage and other loan rates, it does influence the amount financial institutions pay to borrow, which does influence loan pricing.

Lingering Effects From the Pandemic

A recent survey found that the demand for relocation services in 2021 created other issues for the moving industry.

  • 67% of companies reported driver shortages
  • 56% experienced delivery delays
  • 43% had other labor shortages (not including drivers)
  • Damage claims increased 27%
  • Fuel costs rose 15% 
  • Customer complaints about cancellations increased 250% compared to 2019
  • Remote work policies or COVID-19 influenced nearly 40% of the moves

The Economy’s Influence 

Look at any economic study and it will show that as the economy grows and contracts, moving and storage follows suit. When a recession threatens (or arrives), the industry echoes a sharp drop in the economy. Yet while the economy can pivot and recover quickly, it takes the moving and storage more time to catch up. One reason for this lag? Small and medium companies comprise the moving industry and as those companies rely on their local market, it’s difficult to branch out and expand. 

Moving Forward

It’s difficult to predict the long-term effects of the pandemic. But most analysts agree that it will take time before the moving industry increases and hits its stride. Some trends, however, will continue — temporary moves and exoduses from larger cities as people seek more affordable housing and companies choosing to stay remote or offer more flexible work-from-home policies on a permanent basis.

Corporate Relocation

With the work-from-home trend becoming a permanent — not temporary — solution for many organizations, companies have reexamined their own footprints and real estate expenses. Many businesses have already moved out of (or reduced office space in) more expensive, heavily taxed hubs including Los Angeles, New York, and San Francisco.  

The most popular states for company moves in 2022 included:

  • Texas, which tops the list with the most number of corporate relocations since 2020
  • Florida, which offers higher quality of life, a favorable tax environment, and a well-educated, diverse talent pool
  • Arizona, with its pro-business legislation including a no corporate franchise tax policy
  • Georgia, whose state capital, Atlanta, is a burgeoning tech hub
  • Tennessee, which features lower taxes and living expenses and offers business incentives including job tax and energy credits and infrastructure assistance

Company relocations will continue into next year — but as a smaller percentage of the moving industry, those moves will likely have less impact than moves coming from the residential, non-commercial sector. It’s hard to predict moving industry trends for next year, since the economy and rising interest rates may influence the rental and real estate markets.

Are you a commercial real estate investor or looking for a specific property to meet your company’s needs? We invite you to talk to the professionals at CREA United: an organization of CRE professionals from 92 firms representing all disciplines within the CRE industry, from brokers to subcontractors, financial services to security systems, interior designers to architects, movers to IT, and more. 

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