CHICAGO—The improving jobs market has certainly allowed manyexperts and developers to feel even more optimistic about theprospects for commercial real estate in 2015. This includes theresidential market, but changes are underway in the sector and willshape in the coming years how developers take advantage of theimproving conditions.

Experts project, for example, that millennials will make up athird of the country's adult population by 2020, and residentialdevelopers have taken notice. But lingering economic troubles hascaused young people to hold off on buying their first home. Infact, according to data from the US Census, thehomeownershiprate for those 35-and-under dropped to 35.9% in thesecond quarter of 2014, its lowest level in two decades, and heldsteady at 36% in the third quarter, meaning this group will drivedemand for rental units in 2015.

“In downtown Chicago, the number of rental units absorbed in thefirst three quarters of 2014 was more than 50% higher than thetotal for all of 2013, indicating new units in the pipeline will beeasily absorbed,” says Steve Fifield, presidentand founder of Fifield Companies. The firm willbreak ground in first quarter 2015 on Avant River North, a 306-unittower in Chicago's River North neighborhood.