The prolonged economic downturn has caused many consumers to shift—either voluntarily or out of necessity—to a simpler lifestyle that minimizes extravagance and places a premium on quality time with family and friends. The implications for real estate: higher demand for well-designed, low-key gathering places conducive to inexpensive, spontaneous interaction.
Brooke Warrick, president of American LIVES, Inc., was among several speakers discussing changes in consumer behavior at ULI’s 2011 Fall Meeting and Urban Land Expo in Los Angeles. Because the recession was so severe, and the economy still so slow, the shift to simplicity is likely to “stick,” he said.
“This desire for simplicity means people value public space, outdoor living rooms, places where they can just enjoy being together. As a whole, we [as a society] are looking inside ourselves, at what is really important in our lives,” Warrick said. This “return to the basics,” he noted, is rendering place making more important than ever, with authenticity, flexibility, and adaptability among the key ingredients for success.
Other trends that will have a significant impact on development in the years ahead include the following:
A significant rise in the number of single women who purchase homes.
A substantial increase in the number of people who identify themselves as mixed race. (This group, Warrick said, willoutnumber all individual ethnic groups in the United States by 2050.)
An increasing number of multigenerational households.
A rise in neighborhoods that cater to specific ethnicities.
An increase in the elderly population—not just aging baby boomers, but also those reaching 90 and 100.
According to Warrick, all of these trends suggest that real estate demand in the future will be highly bifurcated. “We are seeing a lot of segments emerging, pockets we have not seen much in the past,” he said. “We’ve moved past the era of mass marketing. . . . Developers can stay successful by serving niches; there will be a lot of profitability in them.” Niche marketing is the best strategy for both the residential and retail sectors, he noted.
The increase in the elderly population will heighten demand for services that allow older seniors to age in place, Warrick said. In addition, demand will rise for services and facilities that cater to younger baby boomers entering the “encore” phase of their lives—the point at which they start new careers or seek fulfillment in new pursuits that could entail more education and new opportunities for social interaction. “The encore phenomenon for baby boomers will be huge,” he predicted.