By Chris Rising
Millennials are now the largest generation by population in the United States, clocking in at 92 million in 2017. The sheer volume of this generation makes it the largest workforce this country has ever seen. And while there’s power in numbers, millennials are impacting businesses in other ways. Their lifestyle, which prioritizes differently than their parents’ did, is reshaping commercial real estate. At Rising, we’ve been watching these changes for a while now. Here’s how we see millennials changing the CRE landscape:
Millennials favor urban environments. They want to live in densely populated areas with easy access to restaurants, nightlife, work, and public transportation. After watching their parents toil for two plus hours, languishing in traffic while commuting to and from work, they have learned to value their time.
Millennials are increasing the demand for mixed-use projects. Long gone are the days of long commutes. Driving 30 minutes or more just to go to dinner means a one-hour diversion at minimum. Since this generation is all about efficiency, they’d rather spend that hour with friends, at the gym, or any other activity.
Millennials are in no rush. They're doing things a little bit later than their parents did and delaying life-changing decisions like home ownership, marriage, and starting a family. According to a Goldman Sachs report on millennials, in the last decade, the median marriage age for millennials has been 30 (compared to 23 for baby boomers). Without those life anchors, there's less of a rush to move to the suburbs in search of more space and better schools. That's good news for commercial real estate because it means more millennials enjoying an urban lifestyle for longer periods of time.
Retail spaces will be more experience-driven. The convenience of e-commerce has changed the way millennials shop. In order to survive, retailers will have to rethink the way they use their physical space to acquire foot traffic. Brick and mortar stores will have to become destinations, offering a unique retail experience beyond stocked products.
More millennials are choosing public transportation or vehicle-sharing over driving themselves. With productivity being the primary goal, it’s no surprise that driving themselves to work or out for the night is becoming less and less appealing. Options like ride-sharing, autonomous vehicles, and public transportation all provide extra time to do work, read, or listen to a podcast.
9 to 5 hours are becoming a thing of the past. Millennials value flexibility, and that includes flexible working hours. They’ve witnessed their parents adhere to strict work schedules and long commutes, and as a result, are prioritizing the work-life balance.
Office space is more of a collaborative environment. Working remotely has grown increasingly more popular over the years. Millennials want to work from where they want, when they want, but that doesn’t mean office space will become obsolete. Rather, the purpose of office space is shifting away from cubicles and more toward meeting spaces conducive to a collaborative company environment. The office is evolving into an environment traditionally utilized by creative companies — the office is a place for creative collisions, brainstorming and teamwork. It is no longer the only place to keep documents, or for writing memos, or for housing a library.
Millennial-driven companies will demand more amenities in their office spaces. In order to cater to their employees’ lifestyles, these companies will want more out of their physical office space than previous generations. These include amenities like high-speed WiFi, a conveniently located gym, environmentally-friendly buildings, and outfits for technology-enabled apps like Comfy that allows users to adjust their office’s room temperature via their phone.
Technology is changing the way we use office space. Millennials are digital natives, and they use technology to work smarter, not harder. For example, technological advancements have made virtual meetings more popular. People can now remotely join a meeting rather than trek across town, in traffic, for a quick in-person meeting. We might also see less space devoted to desks as voice dictation technology improves. Eventually we’ll be able to dictate accurately to our computers and phones instead of typing documents and memos out manually.