KANSAS CITY, MO—The millennial generation has been generally regarded as the cohort in the driver's seat when it comes to present and future multifamily demand. However, reports from the Kansas City Federal Reserve and others suggest that baby boomers and their requirements will hold at least as much sway as today's twenty- and thirty-somethings.

While demand from renters born between 1980 and 2000 has recovered to levels last seen prior to the downturn, the report from Kansas City Fed senior economist Jordan Rappaport finds that older Americans are “increasingly downsizing” to apartments. This switch generally begins at around age 70 and becomes more common by age 75, Rappaport writes. The oldest of the baby boomers, the generation born between 1946 and 1964, will turn 70 in 2016.

In fact, while millennials have come back to apartment dwelling in pre-recession numbers, baby boomers never went away. Rappaport writes that multifamily occupancy among Americans ages 50 to 69 increased steadily between 2000 and 2013. “The number of multifamily units occupied by older adults rose by 1.1 million from 2000 to 2007 and by another 1.3 million from 2007 to 2013,” he writes.

In a recent report highlighting the top 10 trends affecting the industry, the invitation-only Counselors of Real Estate predicted that boomers and millennials will have “the greatest impact on real estate through the lifestyles they choose in coming years. This casts a spotlight on housing in all its forms: for seniors, the homes in which they choose to age-in-place, downsized homes, senior communities or assisted living; for Millennials, the decision to buy or postpone buying, and location most often being driven by amenities, such as urban walkable communities.”

The real estate and service sectors targeting each group are adapting, as well: “medical facilities, retail, office and entertainment venues, to name a few; as well as infrastructure and distribution,” according to the Counselors of Real Estate. Overall, demographic shifts will drive decisions across virtually all real estate sectors this year and for the foreseeable future.”

With a preference for roomier living quarters compared to millennials, boomers may be unsatisfied with existing apartment spaces, necessitating more development to accommodate them, according to Rappaport. “In the long run, seniors (ages 70 and above) will likely supplant young adults as the main drivers in multifamily home construction,” he writes. As a consequence, “multifamily home construction is likely to continue to grow at a healthy rate through the end of the decade and thereafter remain well above its level prior to the housing crisis.”

The Counselors report also points to the urbanization trend attracting renters born as far as 54 years apart, a theme also sounded in Trepp's recent report on the multifamily sector. “Both millennials and baby boomers alike are increasingly choosing to rent, especially in cities, to take advantage of an urban lifestyle, the report states. “In addition, some baby boomers are choosing to downsize with the convenience of minimal maintenance as the generation ages. The resulting low vacancy rates for existing units puts upward pressure on rents, making development feasible.”

Thus far, says Trepp, “that demand has been sufficient to absorb construction deliveries. As of now, it is too soon to tell if future deliveries will lead to oversupply, which could negatively affect rent growth.”