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In the post-coronavirus world many people will ditch major cities for less densely populated suburbs, setting up a handful of retailers for new customers and increased sales, Jefferies said.
The Wall Street firm surveyed 1,000 city dwellers and 23% of them said they plan to relocate to the suburbs in the next 18 months. The suburban migration is driving housing turnover and accelerating home ownership, which could result in more foot traffic to many retailers with large presences outside of major cities.
"The market underappreciates tailwinds tied to suburban migration and rising homeownership," Jefferies equity analyst Jonathan Matuszewski told clients in a note called "Ditching the doorman for the cul-de-sac."
Following the global pandemic that rocked many Americans world, Jefferies, along with other Wall Street firms, expects a migration out of major U.S. cities for more space and less clustering. This includes buying homes and spending on home improvement. The firm estimates a 40 basis point to 150 basis point lift to retailer's same-store sales in 2021, with 2022 benefiting as well.
"Home is where the heart is and dollars go," said Matuszewski. "With housing poised to the lead the recovery, investors should consider exposure to this advantaged retail vehicle."