- Boomers and gen Y are a big piece of the puzzle.
- Neither generation is monolithic.
- Appealing to all generations is a path to safety.
There’s no question that baby boomers and genYers (also called millenials) are dominant drivers of real estate demand. Together, the two cohorts account for well over half the U.S. population. But that doesn’t mean each one fits into its own separate bucket, or that their preferences are all the same, according to panelists on “The Barbells of the Market” at ULI’s Spring Meeting in San Diego.
Robert Lang, a professor at UNLV and co-director of Brookings Mountain West, said that just because a large segment of boomers are entering their retirement years doesn’t mean they all will or can retire. The early years of the group of people born between 1946 and 1964 were not good economically, the demographer pointed out, so many of the early boomers are not ready to leave the workforce.
Similarly, while generation Y represent the largest population segment ever, members of this cohort are hardly all the same, Lang added. Part of the reason for the segment’s size is due to immigration, he noted, so while they are all seeking employment, they are not all one population.
“There’s some skepticism with cohort separation among many demographers,” the academic told the session. “There’s no certainty that the demographics in and of themselves is self-predictive.”
Jamie Gutfreund, chief strategy officer at the Intelligence Group, a Los Angeles consumer research agency, said companies which understand the “why” behind what genYers purchase – “who they are as people and how come they believe what they do” – are the ones that are most successful in reaching them.
As boomers fade into the sunset, understanding millennials becomes even more important. Some 80 million strong, the cohort between 18 and 34 is spending $200 billion a year now with the potential to spend double that by 2020, Gutfreund pointed out.
The research strategist described genYers as a “highly oriented group” with “an urban spirit.”
“They have a different approach to living,” she said. “They’re highly entrepreneurial. They’d rather work for themselves then have a job. Many think they can be the next Mark Zuckerburg.”
She also said millennials don’t want to be sold. Rather, “they want to be collaborated with. Their social DNA is ‘I am what I share.’ They rely on openness.”
Jeff Kreshek, vice president of West Coast leasing for Federal Realty, the Washington, D.C.-based real estate investment trust, said it is difficult to plan any kind of development for consumers who have no brand loyalty and move on quickly to the next best thing.
But the key, he said, is giving people an experience they cannot get when the buy something on-line or get elsewhere.
“Shoot down the middle – the project has to be comfortable for all generations – but go heavy, heavy, heavy on the experience,” advised Kreshek, whose firm built the award-winning Cannery Row project in Monterrey, Calif., and Bethesda Row in suburban Maryland.
“Retail, restaurants and place-making,” he said. “You want to create a relationship, with the consumer and become part of their lives.”
Admitting to using his own teenagers as a sounding board, he also suggested talking directly to genYers about what they’re after. “They talk a lot,” he said. “They’ll tell you what they like.”
Alan Mark, chief executive officer of The Mark Co., a San Francisco-based builder of apartments in California, Las Vegas and Denver, said he thinks of the condominiums he builds as his buyers’ bedroom and the properties as their living rooms.
Whereas boomers tend to want large unit with views and genYers want smaller, more affordable units, they all want amenities, plenty of amenities, from guest suites and high end finishes for the boomers to doggie parks and smart technology for the millennials.
Events also are a big draw. But when it comes to leaving their boomer parents behind, genYers still don’t, Mark said. One out of every two still goes house hunting with their folks, he said, and one of every three use their parents’ money as part of their downpayment.