Amid strengthening consumer buying, most department stores continue to struggle—their sales range from sluggish to flat to down. The big demographic bubble of Millennials dresses down—scruffy beards, jeans, and even tee-shirts become acceptable office attire in more companies. Suits and blazers are only necessary occasionally, if at all. And for years now it has been obvious that most people (not only GenerationY) no longer have as much time or interest to stroll through aisles of clothes, perfumes, bedding, pots and pans on multi-levels. Instead of buying stuff, more of us (and especially the Y-crowd) seek to stream content on essential android phone and I-device appendages. And while glued to the screen, shopping on line for the necessities is so much easier –no app even required; just Pay Pal or, if they qualify, a credit card.
Spending is up, but for experiences—these include trips, restaurants, bars, and distractions—concerts, shows and events. There is wanderlust to escape the humdrum of unfulfilled expectations and not a lot of interest in spending time or even doing anything more than sleeping in high-priced, cramped apartments. Weekends away, a trip to the mountains, why not Cuba, or visit a friend on the Coast (whatever coast), let's do something different even if it means no savings in the bank… There will be time for that at some point—that's what the boomers thought too, and look at their dismal savings state… This generation needs its fair share of libation to quiet angst over diminishing prospects in the Era of Less. Eating and drinking out beats grocery shopping, prepping meals, serving, and cleaning up, even if it costs more.
So department stores look even more challenged. Activist investors push Macy's to cash in on the company real estate, which now looks more valuable than its store brands. Even the discounters suffer flaccid performance as local and regional supermarket chains sag too under assault from the likes of Whole Foods, Trader Joes, and the eat-out trends. Could there be a shakeout coming among tenants for always-thought-to-be-secure grocery anchored retail?
The hotel scene is having a major upswing—rising occupancies and room rates from all the tripping and experiencing even as companies keep a tight grip on expense accounts. The stronger dollar may crimp foreign travel to the U.S. just a bit, but discomfort in other parts of the world continues to fuel the condo buying spree not only in New York, but also in places like South Florida where developers are overdoing it again. Hotels and Miami apartment high-rises—are always a boom-bust commodity.
But back to the Millennials—will they return to the suburbs once they marry and have families or will they stay in the cities, have fewer kids, and favor convenience over commuting? Later marriages, the need for two wage earner households, unconventional living arrangements, more single and single parent households all suggest urban living will continue to supplant suburban life styles. It's time to makeover inner ring suburbs into more conventional urban places linked to cores with mass transit and laced with parks for those experiences. And don't forget the WiFi.
Speaking of the suburbs and makeovers, from this week's Washington Post—“There are 71.5 million square feet of vacant office space in the Washington region, much of it piled in office parks. That's enough emptiness to fill the Mall four times over, with just enough left to fill most of the Pentagon, the granddaddy of office buildings.”
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
