- Not all will seek city life; many prefer the areas where they grew up.
- Apartments will benefit first, but demand will extend to single-family homes as Gen Y ages. Some 35 percent already own.
- Their work preferences are not good news for owners of Class A office space.
- “We make our own jobs, even if we are underemployed, so we can live in great neighborhoods with hip restaurants and entertainment and be close to our friends,” says Katlin Jackson, of the Heartland firm in Seattle.
The Gen Y generation is so large that it will “provide a steady flow” of apartment renters and home buyers for the next 10-15 years, a top real estate demographer said at the ULI Fall Meeting in Denver Oct. 17.
Some 77.5 million strong, the group of people between the ages of 17 and 34 surpassed the baby boom generation in size in 2010, researcher Leanne Lachman of Lachman Associates said in a panel discussion what kinds of real estate Gen Y members are going to want as they enter the housing and business marketplaces.
But the huge cohort is far from homogeneous, panelists said, so it would be a mistake for builders and developers to view them all as one.
For example, Lachman said the notion that all Gen Y members want to live in urban locations is a myth. Rather, most of them like the places where they grew up in and want to stay there. “Don’t believe all that commentary about Gen Y’ers want to live in cities,” she said. “Some do, but many don’t.”
Lauren Cahill, development director at Avalon Bay, agreed. “Not all Gen Y’ers want the same thing,” she said. “They have a diverse list of wants and desires.”
Lachman said her research has found that there is plenty of demand across all types of locations and all types of housing. And while the apartment sector will benefit initially from the huge influx of renters – more than 4.5 million people are turning 22 this year or next, and a similar number will do the same in each of the next 10 years – the for-sale market will also get a boost as the cohort ages.
Some 35 percent of all Gen Yers already own, according to Lachman, and many of the rest aspire to ownership, in many cases sooner, rather than later. “Most (Gen Y’ers) have had happy childhoods, love where they grew up and want to move there as soon as possible,” she said.
“Their goals are remarkably similar to their parents. They’re optimistic. They acknowledge the financial crisis but don’t see it seriously altering their drive. Some 90 percent say the will become owners eventually. Eventually they’re get to where the boomers are now.”
As far as the workplace is concerned, Lachman said Gen Yers are driving “a new day.” They want to be in trendy, funky neighborhoods, and that’s “not good” for owners of Class A office space. They also need less office space. In fact, they prefer open space over individual, private offices.
Noting that “we grew up with Mr. Rogers telling us we were unqiue,” GenY’er Cahill of AvalonBay said her generation is “extremely connected,” so it’s “very important” for developers to invest in technology infrastructure. “If you don’t,” she told the standing room only crowd, “it’s a strike against you.”
Another member of the Gen Y generation, Katlin Jackson, a project manager at real estate advisory firm Heartland in Seattle, pointed out her group tends to be “very entrepreneurial. “We make our own jobs, even if we are underemployed, so we can live in great neighborhoods with hip restaurants and entertainment and be close to our friends” she said, noting that many Gen Yers rent