Millennials recently outnumbered Gen X and Baby Boomers as America’s largest generation. This kind of demographic shift has major implications for commercial real estate. Trends show that younger-age demographics want to settle down in suburban communities in order to escape city life. However, they are not the typical single-family home and mini-van suburbia that immediately come to mind. The newly desired suburbs include multi-family developments to work, play, and live in and therefore feature amenities like office spaces, entertainment, and fitness facilities. Communities with access to scenic walkability, transportation, restaurants, and entertainment are typically the most sought after.
These trends have emerged and will continue to emerge for multiple reasons. Research show that Millennials are less likely to get married which diminishes the need for traditional single-family homes. They are also proving to be less interested in owning homes because of the inherent benefits of renting and difficulties to secure a mortgage due to student loans.
Advancements in technology are also proving impactful on the demographic trends shaping commercial real estate. As younger generations continue to rely heavily on technology, locations like cell towers and industrial properties are seeing significant climbs in demand. There is also a predicted lessened demand for commercial garages and parking lots, as advancements in public transportation and autonomous-driving vehicles continue to be made. Such technological advancements have also created an increase in the desire to work remotely which lowers demand for office spaces.
As Millennials and Gen Z’s step onto the scene, the younger half of the Baby Boomer generation are beginning to transition to retirement age. Newly retired Baby Boomers are a generation of “active adults” who tend to prefer amenities like wellness programs. This presents new real estate opportunities such as specialized apartment complexes that feature amenities like wellness activities and on-call doctors.
Whichever generation it may be, there is an obvious demographic change occurring. While such a change has the ability to threaten developers’ traditional projects, it also provides lucrative opportunities for growth.