How Long Will Millennials Love Cities?

SAN DIEGO—Large metropolitan areas like New York City show that some people are content to be urban dwellers throughout their lifetime, the Richman Group of California's president Luke Daniels tells GlobeSt.com exclusively. We spoke with several experts in the multifamily arena to get their take on how multifamily development will evolve as the Millennial generation ages. Stay tuned for a complete feature on multifamily momentum, coming up in the April issue of GlobeSt.com's sister publication Real Estate Forum.

GlobeSt.com: How will multifamily development change as Millennials mature and become parents?

Daniels: Millennials are embracing the urban lifestyle, enjoying being in the thick of entertainment, jobs, restaurants, culture and recreation. The focus of their work life and play life becomes the city. Only time will tell if they are willing to give all this up as they start to have children. Consider the lifestyle in New York City or certain other large metropolitan areas. It has shown us that some people are content to be urban dwellers throughout their lifetime. That may be the future of Urban America. The flight to the suburbs was brought about, in part, by the lack of amenities in the city centers, which is no longer the case. Of course, apartment size and amenities may change when there are more children in the mix.

Jeff Olshan, VP asset management, Passco Cos.: Developers will continue to cater to the Millennials generation as this group matures, and I do not foresee two much changing in terms of their tastes. Of course, as this generation has children, developers will also need to cater to the Millennials' children in order to keep the Millennial parents happy. Millennials will always want the latest technology, as well as highly amenitized living, but it's possible that their children will have very different desires and demands. Much like the tastes of Generation X and the Baby Boomers far differed from those of the Millennials, developers will need to learn how to marry the needs of today's Millennials and the next generation as we move forward.

Sagiv Rosano, president and founder, Rosano Partners: Millennials are not in a hurry to become parents in their 20s and early 30s like past generations. Today's Millennials are drawn to urban, cool, walkable and high-tech environments, and we don't anticipate that this demand will change, even when this demographic decides to become parents. However, many Millennials may find that they will not be able to afford to buy in these urban areas. For this reason, multifamily and mixed-use properties that offer amenities and conveniences to serve young families will remain in high demand. We have seen examples of mixed-use buildings with a number of family-friendly entertainment features in Chicago. Many of these properties have a child-care tenant in their retail areas or playrooms for young kids, etc. To meet the needs of Millennials who want to continue to live in aspirational, flexible rental buildings even as they age with children, multifamily developers will need to continue to be forward thinking as they evaluate the product they are developing. Many developers will likely work to attract the psychographic profile of an “uber-Millennial” and will prepare for this demand by developing housing that provides more common space, more tech and more entertainment areas. These items will be of interest to the next wave of end users, now coined the “post-Millennials.”

Caitlin Walter, assistant director, research, National Multifamily Housing Council: This is still a large question mark. Eventually, Millennials will get married and start a family, but that does not necessarily mean that they will leave apartments. Additionally, people are getting married and having children later—married couples with children are now just 20% of all households in the US.

Nick Ryan, CEO, the Marquette Cos.: The average age for Millennials to marry is predicted to be 30, as compared to the early 20s for the Baby-Boomer generation. The Millennial generation has been slower to marry, slower to move out of the next and slower to buy. Will they eventually decide to settle down, marry, have kids and buy a home? Probably, but it is still not a given that the same percentage will choose that road as previous generations.

Diana Pittro, EVP, RMK Management Corp.: Millennials have bucked the trends set forth by previous generations at every turn, and I think that will continue as they marry and have children. Millennials are more likely than the previous generations to continue to rent and raise their children in urban areas in multifamily housing.

James Gwilliam, VP, Southern California Development and Investments, Kilroy Realty Corp.: While we may not be able to forecast how the Millennials' preferences will change over time, there is sufficient data to suggest that population growth is inevitable as is the demand for highly amenitized urban and urbanesque environments where people can live, work, dine, shop and play. Projects that are positioned with those key ingredients will always be in demand. Data also suggests that Millennials are having smaller families (as a Millennial myself with three kids, I am definitely an anomaly). Some of the data we have seen suggest that these smaller families are also more included to forego a suburban lifestyle in favor of the various trade-offs associated with renting, but again, to the extent that rental environment can be provided in a setting where the need to get in a car is reduced, the retention/capture of smaller families is much greater.