Millennials' Gathering Tendencies Impact Real Estate

Hill Country Galleria is undergoing a $16 million renovation.

AUSTIN, TX—Much has been said about the impact of millennials. They have officially passed the baby boomer generation in size and from 2000 to today, millennials have contributed to robust growth and increased urbanization in various American cities. As they reach young adulthood and its earliest members enter the modern workforce, the generation is influencing the growth of our cities, the economy and the real estate market. Think location, location, location. Mark Harris , associate at Avison Young , tells GlobeSt.com: “In the office sector, we are seeing less middle management and as low as 125 to 150 per square foot per person for workspace. Real estate is changing due to millennials’ preference for close collaboration, hence, greater density.” With that density is a hidden cost to building components, Avison Young tells GlobeSt.com in this EXCLUSIVE . More users equal more wear and tear on elevators, restrooms and other moving parts, with maintenance costs borne by all tenants. The millennial influence doesn’t stop at the office door. Just as urban cores are influenced by those younger workers, suburban areas are responding in similar fashion. Millennials have indicated they prefer the small town feel rather than the previous power center or mall, which has developers responding to accommodate. Those walkable retail demands have given way to town centers springing up in outlying areas. And, the increase in millennials in all areas has resulted in additional multifamily developments. Jeff Henley Jr. , associate at Avison Young, tells GlobeSt.com: “Today’s millennials seek constant innovation and embracement. With their influence, we are seeing many suburban areas, once suited for families, developing into densely populated hybridized urban centers outfitted with high-quality amenities.” An example of a millennial-centric development is the Hill Country Galleria in Bee Cave, TX.  This 1.3 million square foot class-A lifestyle/mixed-use development is undergoing a $16 million renovation. Located along Texas 71 West between Bee Cave Road and RM 620, the Hill Country Galleria is home to dozens of shops and restaurants, apartments, offices, Bee Cave City Hall and the Sonesta Bee Cave Austin Hotel. Retail anchor tenants include Dillard’s, Whole Foods Market, Barnes & Noble and Dick’s Sporting Goods . “Our goal is to make the Galleria a more vibrant, comfortable, convenient shopping and entertainment destination,” says general manager Jim Hopping. “Bee Cave and the surrounding area is one of the fastest-growing and most sought-after regions of greater Austin. We’re excited to serve this great community and continue to deliver a first-class experience for our shoppers, visitors and tenants.” Peloton Commercial Real Estate has been awarded the office leasing assignment. The shopping center has landed a new H&M store, which will open next year, according to marketing director Courtney Bunte . To make way for H&M, Bunte said that three businesses on the center’s west end near Dillard’s are clearing out. Shoppers will notice plenty of other changes in 2016, including additional outdoor seating, landscaping upgrades and shaded areas. Harris tells GlobeSt.com: “Millennials put a larger emphasis on entertainment and social interaction while doing with less when it comes to personal space. High-density working environments, micro-unit apartments and an emphasis on restaurants, bars, coffee shops and live music venues are a direct result of this.” Downtown developments such as The Domain near transit are also very popular in serving these nodes of population growth. Avison Young’s principal and managing director of Austin, Mike Kennedy , tells GlobeSt.com: “We are on the early edge of millennials’ influence. Trendy retail and restaurants are opening new locations in downtown Austin near millennials to offer a live work play environment.”