This is the second post in a two-part series about how commercial real estate should evolve to meet the needs of the millennial generation. Read the first post.
As the world’s first digital generation, those born from the early 1980s to the late 1990s were regularly exposed to new technologies in the home and at school. They have been at the forefront of platforms with a specific social use, like instant messaging and social media. And they’re generally considered to be better educated and more diverse than their parents and grandparents, though their diversity has also made them difficult to pen down.
One thing is for sure: they are more numerous than the previous generation. Recently, millennials overtook Generation X as the largest share of the American workforce. However, their strength in numbers has yet to translate to strength in purchasing power. Boomers still control the great majority of disposable income in the US (some sources put their share at 70%), but millennials’ overall influence in business and urban culture will only continue to grow over the next several years.
Because of the way they grew up, millennials generally have different expectations for the quality and immediacy of their communications and business transactions. Their goal is not to completely upend commercial real estate, but they will shift the way renters and buyers interact with the market. If the market is going to keep up, it will need to shift the focus of commercial real estate for millennials.
Focus on Digital
If millennials are anything, they’re digitally savvy. Many prefer to do their initial research for large purchases online. As such, commercial listings will need to become easier to examine online. Photos and video, video tours and digital walk throughs, virtual reality—these will all become standards for both commercial and residential listings. Property managers will also need to better embrace technology. Tenants now want dependable WiFi in private and communal spaces, as well as better control over their ability to personalize their technology options.
Focus on Mixed-Use Spaces
Millennials are currently satisfied with small, rental spaces in urban centers and moving to the perimeter of the city when they are ready to buy. But interest in main street-style retail is also increasing, along with office environments that utilize shared spaces, while strip malls and big-box centers have seen declines. Mixed-use neighborhoods may be the solution. Spots like Biltmore Park in Asheville or Reynolds Village in Woodfin offer the quality retail and work “experiences” that are on trend, and have the opportunity to really thrive with millennials if the residential options (rental or owned) can remain affordable.
Focus on Green Living
Right up there with a shifting social and community focus, commercial spaces and urban cores will need to have a focus on the environment. Sustainable living is more important now than it has been for current generations. This means public transportation and proximity to bike racks and green spaces are affecting decisions more now than in the past. Millennials will also continue to prefer green-built homes, condos, and apartments when they can afford them, as well as sustainable, noninvasive landscaping.
Because of their large numbers, millennials’ preferences will continue to influence trends in the way traffic flows into and out of commercial spaces. But the commercial real estate market still very much has a multi-generational presence. Check out the resources at the bottom of this post to gain a greater perspective on how all of our current generations are affecting commercial real estate.