Dear Tech-Birds,

My answer to your first question is yes. Boomer and Pre-Boomer markets are likely to continue to migrate to locations like Phoenix that provide a high level of livability at a reasonable cost. The older Millennial market (age 24-34) will likely continue to show significant growth over the next decade. High amenity destinations within your region, including Downtown Phoenix, Scottsdale and Tempe, will be the primary benefactors of the inability of places like San Francisco to lower the cost of providing the type of activity centers preferred by Millennials with skills needed by high tech startups. Fortunately for you, bustling activity centers have demonstrated a growing appeal to the older buyer and renter as well.

Thus you can continue to provide products for the “classic” migrants to the Valley of the Sun, but you should also retool for new products and marketing strategy. The majority of the Millennials the area is attracting are likely to be renters, not buyers. Currently only 34% of adults under 35 years of age own their own homes. There are two basic reasons for this low rate of home ownership. First, the high level of college debt many of these young people have taken on significantly reduces their ability to make a home purchase. It's also the reason why so many professional Millennials are marrying late and having few, if any, children. Second, unlike their parents' generation, most professional Millennials do not visualize working for the same company many years into the future. There are few assets more illiquid than a home, and many Millennials treasure mobility over location.

As a long time developer, I'm certain you keep on top of the regional supply/demand conditions. And while I can't give you a definitive response, I can recommend the development of ownership townhomes and/or multifamily condos for the Boomer/Pre-Boomer market and multifamily rentals located in high amenity activity centers for the younger adults.

SAN FRANCISCO—Wouldn't it be convenient if someone had clear, intelligent answers to most of your CRE-related questions? Problem solved. Nina J. Gruen, a.k.a. Ms. Real Estate, a.k.a. the principal sociologist overseeing market research and analysis at Gruen Gruen + Associates, is here to answer readers' questions.

Dear Ms. Real Estate:

Since the late 90s, I have been developing multifamily for-sale housing in Greater Phoenix. My products (townhomes and mid-rise condos) have appealed to older buyers who downsized from elsewhere in the region, those who bought “vacation homes,” some intending to move permanently when they retire, and “snowbirds” who come south in the winter from their homes in Canada. Over the last several years, we have seen a change in the mix of demand for housing here, with a much higher proportion of entrants into our market consisting of singles and couples under 35 years of age. Of these younger workers, many have come here for jobs in businesses that have moved all or a portion of their operations here to attract workers that don't need to spend as much on the cost of living as they would in Silicon Valley. My question is twofold: First, are these younger migrants to our area likely to keep on coming? If the answer to that question is yes, do I need to significantly change my product model and marketing strategy?

—Are the Tech-Birds More Than a Lark?

Dear Tech-Birds,

My answer to your first question is yes. Boomer and Pre-Boomer markets are likely to continue to migrate to locations like Phoenix that provide a high level of livability at a reasonable cost. The older Millennial market (age 24-34) will likely continue to show significant growth over the next decade. High amenity destinations within your region, including Downtown Phoenix, Scottsdale and Tempe, will be the primary benefactors of the inability of places like San Francisco to lower the cost of providing the type of activity centers preferred by Millennials with skills needed by high tech startups. Fortunately for you, bustling activity centers have demonstrated a growing appeal to the older buyer and renter as well.

Thus you can continue to provide products for the “classic” migrants to the Valley of the Sun, but you should also retool for new products and marketing strategy. The majority of the Millennials the area is attracting are likely to be renters, not buyers. Currently only 34% of adults under 35 years of age own their own homes. There are two basic reasons for this low rate of home ownership. First, the high level of college debt many of these young people have taken on significantly reduces their ability to make a home purchase. It's also the reason why so many professional Millennials are marrying late and having few, if any, children. Second, unlike their parents' generation, most professional Millennials do not visualize working for the same company many years into the future. There are few assets more illiquid than a home, and many Millennials treasure mobility over location.

As a long time developer, I'm certain you keep on top of the regional supply/demand conditions. And while I can't give you a definitive response, I can recommend the development of ownership townhomes and/or multifamily condos for the Boomer/Pre-Boomer market and multifamily rentals located in high amenity activity centers for the younger adults.