The “generational disruption” unfolding today is of historic significance. The second wave millennials coming of age coincides with a transformation in the norms of life, work and society at every level.
The demographics of the millennial generation reveal they are the largest consumer group in U.S. history. There are currently some 75.4 million millennials (born between 1980-1997). That means a significant number of today’s real estate decisions, as well as those connected to the workplace, are made by people younger than 40 years of age.
Millennials are well-known for their love of cities and the ability to live, work and play in a single urban
area. But while this ethnically and racially diverse generation is postponing marriage and children, they are not putting it off indefinitely. In fact, 60 percent expect to live in detached single-family homes within the next five years. Real estate developers, investors, owners and builders must have a good grasp on location preferences, design and amenity features, and technology advances.
With readily developable land in Central Florida and great infill sites in our bedroom communities, suburban upgrades are being undertaken with mixed use, creating dense groupings of retail ventures, businesses, luxury condos/apartments and great communal spaces and evolving amenities. These types of live/work/play options also become viable alternatives for baby boomers to use for transition out of their primary residences as it becomes necessary.
Metro Orlando is seeing forward-thinking developments like Lake Nona that are designing creative, modern and collaborative communities and workplaces with the benefits of an urban setting. We can also look to Maitland City Centre, Ravadauge and Up Development on U.S. Highway 17-92 and Lee Road. And we can’t leave out the beautiful redevelopment of our suburban communities, such as what has been done in Winter Garden, DeLand and Sanford. It cannot be disputed that many millennials will live in cities their entire lives, but this is no different than previous generations. The difference is the size of this young generation is impactful for wherever they choose to live.
Millennials also are disrupting office space use. Building owners must be able to offer collaborative, flexible environments and make suggestions for customizable furniture and interior designs. The big challenge facing owners of older buildings is how to manage operating expenses with this flexible work population. This is a significant impact on utilities, security and maintenance, because millennials no longer work just 9 to 5. Will the rents increase to a level that can offset these impacts? All of this potentially affects the building value. Also expected are gyms, game rooms and smart-building technology. We also need to further explore capital costs to modernize building systems to accommodate this expanded use and keep these buildings as an option for the millennial generation. The long-term effect is going to be a change in how we conduct our real estate business.
By 2025, 75 percent of the workers in the world will be millennials. Their generational disruption is larger than any we’ve seen before — and everyone must learn to adapt. It’s an exciting time to be in commercial real estate and I can’t remember a similar period when every standard we believed to be true is now no longer so.
To learn more about the future of the real estate market in Florida contact a member of the 9 Core Realty team!