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DALLAS — Red states have quietly outpaced their blue-state counterparts in commercial real estate investment returns for years, according to a new study highlighting stark differences in state economic policies.
But sweeping Democratic gains in Tuesday’s midterm elections — even in traditionally deep-red strongholds — are raising questions about whether those states can maintain their economic advantages as the political landscape shifts in the new year.
Mitch Flax, founder and chief investment officer of Net Equity Capital, told Fox News Digital his research was sparked by the observation that commercial real estate investors based in blue states were reluctant to invest in their own markets.
The findings underscore a broader economic battle playing out across the country as businesses and wealthy Americans relocate across state lines, bringing jobs, investment dollars and tax revenue with them while potentially leaving financial holes in the states they abandon.
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As businesses leave high-cost states, Texas has become the undisputed top destination. (Tom Fox/The Dallas Morning News/Getty Images)
“I had a large family office based out of Chicago who lives in California who said, we don’t invest in real estate in blue states,” Flax recalled.
Coming on the heels of the 2026 midterms, the study also raises questions about whether the state-level tax and business policies that have helped fuel growth in red states will remain intact as Democrats make political gains and begin to enact their agenda.
The encounter prompted Flax to examine nearly 24,000 commercial real estate transactions to determine whether political differences between states were associated with investment performance. Researchers used a proxy to estimate returns and classified states as red or blue based on their votes in the 2024 presidential election.
Flax attributed the performance gap identified in his analysis largely to differences in state-level business policies, arguing that those policies influence where companies relocate, jobs are created and, ultimately, where capital flows.
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The Texas capital attracted 88 corporate relocations from 2018 to 2025. (Brandon Bell/Getty Images)
The findings come as corporate migration toward lower-tax states rose in recent years, with Texas emerging as a major destination for companies relocating from costly coastal hubs.
Flax says that Texas is on track to be the next Singapore-style “tax haven” for companies, due to its policies attracting business and industry.
“We’ve all seen the movie Crazy Rich Asians — get ready for Crazy Rich Texans, because that movie is coming,” he said.
It’s unclear how Tuesday’s results will impact that prediction after Texas flipped a U.S. Senate seat blue with Senator-elect James Talarico beating Ken Paxton, who was backed by President Donald Trump, and Democrat Governor-elect Gina Hinojosa beating Republican Gov. Greg Abbott.
As Fox News Digital previously reported, a CBRE analysis found that 725 companies relocated their headquarters between 2018 and 2025. Dallas-Fort Worth led the nation with 111 relocations, followed by Austin with 88 and Houston with 31.
Meanwhile, the San Francisco Bay Area, a deep blue enclave, recorded a net loss of 163 corporate headquarters during the same period, as companies cited taxes, labor regulations and rising living costs among their reasons for leaving.
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Texas has attracted a wave of corporate relocations and business investment in recent years, helping fuel its emergence as a growing financial hub. (Shelby Tauber/The Washington Post/Getty Images)
Flax, however, also argued that population shifts and corporate relocations are symptoms of a deeper economic divide, with underlying business policies shaping investment decisions and determining where capital flows.
“Most of the large asset managers out there are underwriting population in this migration flow. But the reality is that’s a symptom,” Flax told Fox News Digital. “When you look at exactly what’s causing it, it’s pure structural business policy,” he added.
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Flax said those policies can trigger a ripple effect across the commercial real estate market as businesses relocate, workers follow and demand grows for housing, retail and office space.
“Migration is the symptom, but it’s a cascade, right? So policy draws people and companies and then every kind of commercial real estate follows,” Flax said. “Apartments follow migration, retail follows rooftops, office follows jobs, warehouse follows logistics.”
