Millennials’ Influence on the Multifamily Market: Analysis & Trends
As the nation’s largest living generation, millennials stand to make quite an impact on the future of the multifamily commercial real estate market. Already at 76 million, their numbers are expected to peak in 2036 at 82.1 million, surpassing the baby boomers’ by nearly 3 million, according to the U.S. Census Bureau’s latest reports released in April 2016. Another report by the Case Foundation survey of more than 75,000 millennials, finds that the millennial generation will be the most prolific generation to inhabit our country.
In addition to their sheer population in numbers, millennials have also taken advantage of the personal and professional opportunities afforded by a global economy and digital connectivity. They travel more, purchase more, change jobs more, obtain more education, and develop relationships far differently. In addition, millennials are reported to spend $350 billion annually – extending their sphere of influence over today’s economy on many facets.
However, when it comes to purchasing real estate, it is safe to say that many millennials are caught in a catch-22. Even though more millennials associate buying a home with the “American Dream” than any other generation, the homeownership rate for Americans under age 35 is at near record lows at just 34.7 percent. In other words, millennials want to buy homes, but various factors have been preventing them from doing so.
Waiting until later in life to start families is one commonly-cited aspect of the millennial story. Millennials are also saddled with student debt and low wages, which have prevented them from amassing any significant savings. Despite these factors, the demographic evidence is compelling – and many experts are expecting a shift in millennial purchasing behavior in the coming years.
By 2022, not only will millennials be the driving force behind the new economy, they will also be controlling most of the economic growth factors in Colorado that will impact the multifamily markets.
Our team at RMG has explored several design and community development options for the millennial generation, and has discovered several trends millennials are seeking in their potential multifamily communities.
These trends include:
- Smaller Size- Smaller carbon footprints are a core value of this generation. Smaller designs that are more compact and efficient are important to this generation.
- Clean lines – The overall design scheme popular with this age group is still essentially modern. Millennials are choosing simpler designs with cabinets that are lower, and with clean lines without ornate fixtures.
- True Sustainability – Solar on rooftops with Tesla power walls will become a standard in the near future. Appliances that are high-efficiency and materials that are environmentally friendly are both rising trends amongst millennial homebuyers.
- Functionality – However, in addition to sustainability, they are also focused on items that will be durable and serve clear purposes in home organization. Integrated or hidden cabinets and well-organized closets featuring lots of cubbies and hidden fold out shelves are also on the rise.
- Decks and patios – Millennials want a community with options for outdoor entertainment and living space. A deck or patio was ranked as the most-desired space with 59 percent of respondents to a survey by Pew.
- Color Trends – Colored LED lights including lights in the shower, fireplace, and above-kitchen cabinets.
- Smart Technology –There is an overarching trend towards technology integration in units, from apps that control the stair LED lights, to the NEST thermostats that track the heating and air-conditioning patterns – and then deliver that information directly to a smartphone.
- Other tech options – Including automated shelving, fans and lights that turn on and off by sensor, and door locks that can be operated remotely from your phone or tablet.
- Collaboration- Multifamily units that promote personal privacy and still allow for community gatherings are preferred.
We recommend actively pursuing this demographic as this generation will be driving the multifamily business in the very near future. RMG has already designed an entire millennial community for a client in Denver: Microtopia Ventures with a focus on Micro-Homes.
Our architects designed each micro home, from 580-square-feet to 1,40-square-feet, with all the design and functional attributes as previously mentioned. By utilizing a mix and match panel type of design, we have created specific economies of scale in the building costs of these units. We also added unique “gingerbread” features to give each unit its own character and appeal without the higher costs that are usually associated with these types of units.
Our land planning division also designed a collaborative and functional community complete with neighborhood centers, green houses, walking paths, bike paths, and full community green houses.
In addition, we designed the commercial sector of this community to include six buildings which house an event center, retail such as micro-brews, restaurants, and a grocery store. Combined with an urgent care along with a bike shop, business incubator and many other facets, RMG designed to accommodate millennials’ tastes and desires for multifamily living.
Millennials are not a generation to be ignored nor misunderstood. The combination of their upbringing, accessibility to the latest technology and global awareness of the impacts of sustainability can be capitalized on through custom designed spaces in the multifamily market.