When Will Millennials Move to the ‘Burbs?
Millennials are known for their love of all things urban. But, that might be a function of age, not inherent demographic values. According to a recent survey by ULI, six out of 10 millennials expect to live in a detached single-family home within five years.
The drive to suburbanization is the same for millennials as it has been for other recent generations: marriage and kids. Although it is true that millennials are putting off marriage and family until later in life, that doesn’t mean they are putting it off indefinitely. Seventy-five percent of millennials still plan to get married, which will likely prompt a suburban exodus.
As a result, suburbs will need to evolve and develop to meet millennials’ uniquely urbanized habits.
Suburbs are reinventing themselves
Suburbs have not been blind to the urban shift in recent years, and are working to reinvent themselves. Many suburbs are enhancing their appeal by adding “urban” features such as higher-density nodes or downtowns that offer shopping, restaurants, and entertainment — as well as improving connectivity to mass transit, walking trails, and bike routes. It turns out that millennials prefer walking over driving.
As suburbs evolve, individual assets are also being built to embrace the millennials mindset. The millennial generation, considered a target workforce because of its sheer numbers, has grown up with smartphones and is less likely to want to sit in a cubicle all day. Instead, they are looking for a whole new type of environment. These typically include creative offices that value open space, collaboration, and an unhealthy amount of exposed brick.
New suburbs will gain popularity
The redistribution of millennials will also provide an opportunity for the rise of newer suburbs. While the traditional suburbs of baby boomers and Generation X will remain popular, they will not be the only option for the youngest generation aspiring for a front lawn.
New suburbs will sprout up near secondary markets, which have experienced a remarkable rise in recent years. These newer suburbs will emphasize a transit-oriented development that offers the work-live-play that has become standard for many urban environments.
Although 18-hour cities are somewhat loosely defined, some of the metros that top the list generally include the likes of Dallas, Austin, Charlotte, Atlanta, Denver, Nashville, Portland, and Raleigh/Durham, according an Emerging Trends 2016 report published by PwC and ULI. The first wave of rising suburbs will emerge in their radius.
Urban with some suburban amenities
As more millennials embrace the suburban lifestyle, urban centers will do some adjusting of their own. Many landlords will have to figure out how to “suburbanize” some of their properties to make an urban life feasible for millennial parents.
One example could be daycare.
At a recent roundtable event, one CRE executive explained that many office landlords should consider re-introducing daycare into their buildings. After a surge several decades ago, the number of daycares within an office building has been diminishing and fairly logical. Daycares are often rife with liabilities, compete with prime retail space, and weren’t being much of the workforce — so why keep them? But, as more millennials seriously consider the suburban alternative, many landlords will have to figure out how to toe the line.
Alternatively, landlords could double down on the next unmarried demographic: Gen-Z. Will their habits and interests in real estate be dramatically different?