Earlier this month, a new abortion law went into effect in Texas that effectively bars women from terminating a pregnancy after the six-week mark. Specifically, the new law states that an abortion cannot occur once a heartbeat can be detected in an embryo, which typically happens around the sixth week of pregnancy. And while the law does permit abortions when a mother's health is at risk, those exceptions are pretty narrow.
Not surprisingly, women's rights advocates are up in arms over the new law. And many Texas residents are downright outraged. The question is: Will the new law cause a mass exodus from the state on both the residential and commercial sides? And how worried should local real estate investors be?
A far-reaching impact
You'd think that abortion laws would have little to do with real estate. But the reality is that a lot of residents and business owners are very unhappy with the recent legislation. And many may choose to take their rent payments and businesses elsewhere.
Salesforce, for example, has already told its Texas-based employees that if they and their families are concerned about the way the new abortion law might impact them, the company will help them relocate to another state. It's worth noting that Salesforce didn't announce a stance on the law; it simply made it clear that Texas employees who wish to abandon the state will receive financial assistance in doing so.
The tech industry, on the whole, has stayed out of the politics of the new law. But both Uber and Lyft have announced that they'll pick up the tab for legal costs for any drivers sued for transporting women to an abortion clinic.
Right now, Texas offers companies the benefit of relatively cheap real estate. Even in the up-and-coming city of Austin, the average rent for office space in 2020 was $42.69 per square foot, reports CommercialCafe. By contrast, last year, the average rent for office space in New York City was $85.56. And that was at a time when New York City's office building vacancy rate was sitting at a 30-year high.
But as outrage over the new law intensifies, it's possible that we may see companies start to take a more active stance -- namely, by making plans to leave Texas and set up shop in other states, even if that means having to absorb higher rent prices as a result. Furthermore, there could be a mass exodus of residential tenants in Texas in the coming months as renters try to figure out their next steps.
Being unhappy with the state's abortion law changes isn't likely to serve as grounds to break an apartment lease midway through. But we could see an uptick of renters leaving the state once their lease obligations come to an end.
All told, Texas real estate could take a hit, depending on how renters and businesses ultimately opt to respond to the new law. Investors should brace for some impact once the news has a chance to settle in and more and more companies map out their next steps.