Millennials have had an incredible impact on the real estate market this cycle. The massive demographic group, which has come of age during the Great Recession, has triggered the rise of creative office design, mixed-use development, experiential retail and online shopping. They have touched every asset class in a new way and driven growth across them all. Still, there is more to come. The latest segment of the millennial generation is now graduating college and entering the workforce, but this younger group has a much different experience and perspective than its millennial predecessors.
“The younger millennials really grew up in a different era,” Matthew Mejia, senior manager at RSM, tells GlobeSt.com. “They are entering the workforce post recession and when the conflict in the Middle East appears to be dying down. As a result, they have a different perspective on life. I think a lot of the millennials that lived through the recession remember 9-11, and they grew up during the major conflict in the Middle East. This new group coming out of college has a lot of the same attributes in terms of technology and the virtual world but with the benefit of living in a post-recession environment.”
The recession has been charged with fueling millennial demand for apartment living, which isn't surprising considering the crash of the housing market caused the economic disaster. Millennials—many multifamily developers have claimed—are not interested in buying a home as a result. Mejia, however, says that millennials are merely delaying home buying, and expects apartment demand to remain strong for this younger class of millennials that didn't experience the recession. “You are going to continue to see people renting longer. Baby boomers are one of the wealthiest generations in history, and as a result millennials, both young and old, have a lot of wealth to fall back on,” says Mejia. “They don't have the urgency to buy a home right away. A lot of millennials are just starting to get married and they are buying houses later because they can. Apartments today, especially in the Southern California market, act as both living and social quarters with onsite bars and swimming pools. That is attractive to younger millennials that are coming our of college, and that is a trend that we will continue to see for quite some time.”
While younger millennials have a post-recession point-of-view, they live and experience the world through technology in a very similar way as older millennials. In fact, Mejia expects many of the trends to remain consistent as the younger millennial generation enters the workforce. “I think that as long as you have companies, like Facebook, that are run and being managed by millennials, the trend of social life and social work will continue well into the foreseeable future,” he explains. “Even in more traditional professions, the office is being shaped by the millennial group.”
While the millennial demographic is producing a new breed, it is still a group that investors and developers will need to watch and serve, as a way remain relevant and competitive. “Millennials are fairly young, and they have a lot of time left in the workforce, and they will continue to influence the market for quite some time,” says Mejia.
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Kelsi Maree Borland
