For years, Florida was considered a sunny retirement community, a haven for northerners looking to escape harsh winters and higher taxes. But as the state’s university system has grown, industry has expanded and drawn more corporations to Florida’s largest cities. The influx of professional opportunities has drawn younger generations to settle or remain in Florida, prompting an interesting demographic shift for real estate developers. With so many generations to serve in Florida’s increasingly attractive housing market, how can developers be sure their product supply will appeal to their target audience?
John Burns, the CEO of John Burns Real Estate Consulting, says that developers need to stay ahead of the curve by taking an in-depth look at consumers and their habits. Rather than separate Florida’s largest population groups into two major buckets—retirees and millennials—Burns suggests that developers need to analyze generations by the decade they were born in. “Mark Zuckerberg and my 17-year-old daughter would both be considered millennials, yet their housing needs couldn’t be more different,” says Burns. “You need to look at where people are in their life stage.”
The author of Big Shifts Ahead: Demographic Clarity for Businesses, Burns heads up a firm that specializes in providing and analyzing independent research to U.S. housing developers. Presenting during ULI’s Florida Summit, Burns says he relies on what he calls “the 4-5-6 rule” to consult his clients on their real estate development decisions, from location to product type and pricing. In order to have a good grasp of demographic shifts and the needs of each particular group, developers must understand the four big influencers, during people’s five main life stages, to help answer the six key consumer questions when developing real property.
The four biggest drivers of demographic shifts—government policies, economic growth, technological advancements, and societal changes—have affected each generation in different ways. Understanding the particular effect over a generation’s life span—childhood, early career, family formation, late career, and retirement—means that developers can predict with near certainty the types of housing needed to serve each demographic throughout their lifetime.
Burns separates generations into decades, giving each decade its own moniker and analysis. A “Saver” born in the 1930s, for example, adopted conservative spending attitudes during the Great Depression era. An “Innovator” born in the 1950s, by contrast, put an emphasis on hard work and financial success, and is higher energy and quicker to adapt to technological changes.
That group, which Burns approximates amounts to 40 million people, will turn 65 within the next decade, and they are interested in a different type of retirement living than their 1930s counterparts: Instead of swapping a family home for an inexpensive, traditional retirement community, this group will purchase a smaller single-family home in a 55-and-over community with active lifestyle centers, like golf courses and concierge services.
Younger generations, in turn, put an emphasis on connectivity and urban living, but economic realities have had a major impact on these generations. A “Balancer” born in the 1970s may have purchased a home during the early 2000s, but lost out hardest during the Great Recession and is purchasing property with affordability and caution in mind.
Similarly, a “Sharer” born in the 1980s entered the workforce during the Great Recession, and will likely never achieve the same financial success his or her parents did. Sharers may value city living, but in most instances cannot afford to purchase property in urban centers.
As a result, developers have created “surban” communities, or suburban developments built with urban living in mind. The Residences at Mercato in Naples and Downtown Doral in Miami are both prime examples of suburban communities designed to appeal to consumers for their walkability, access to shopping and entertainment, and community-centric design.
Pam Parisi, vice president of marketing at Newland Communities, has enjoyed marked success with two surban communities catering to consumers born in the 1970s and millennials born in the 1980s.
“We were struggling to get a home priced under $200,000 for this 1970s Balancers generation of buyers,” Parisi says. “But we realized that if we offer larger sizes at a lower price point, then people wouldn’t mind attached living. So we developed Waterset Townhomes with Lennar, and we’ve had so much success that we’re running out of product.”
At Bexley in Pasco County, Newland opened the Bexley Club to appeal to 1980s Sharers. One of the components is a café information center concept. “We started incorporating cafés into welcome centers, and these are cool, hip environments, where the chef is well known in the food community,” she says. “We also partnered with local breweries and artisanal coffee shops. The café has been open since November, and it’s busy every day.”
Still, the demand for urban housing has not subsided, and developers have developed multifamily housing to appeal to consumers who cannot afford homeownership in urban neighborhoods. The 1980s Sharer generation, who are delaying starting families and therefore have less of an interest in homeownership, are easily drawn to rental apartments in Class A locations. But interestingly enough, older generations are following suit. “People aged 55 to 59, 60 to 64, and 65 to 69 are starting to rent,” Burns says. “They’re selling their houses and becoming renters.”
Greg West, the chief development officer of ZOM Holdings, noted that phenomenon is at play at Monarc, a multifamily complex in the heart of downtown Miami. Anchored by a Whole Foods and a truly urban, transit-oriented environment, Monarc is attracting both retirees and millennials in droves. “We have people in this building that are 25 to 35 years old, and then we skip to renters that are between 55 and 75 years old,” he says. “There is no middle ground.”
Ultimately, Burns says that developers should plan for 12.5 million households over the next ten years, with approximately 2.5 million households composed of inhabitants under the age of 45. While 1950s Innovators, 1960s Equalers, and 1970s Balancers will continue to make up the majority of the housing market, developers should focus on delivering affordable, smaller single-family homes in surban communities. “That’s the opportunity,” Burns says, “especially in Florida.”