Real estate is constantly evolving, partly because of technology but mostly due to the shift in consumer demand. As different generational changes occur, occupiers ‘ demands evolve leading to changes in the way that people interact with different buildings. Now it is about the experience a building brings with it, rather than just being a space. Consumers are now asking for more technologically advanced spaces that offer sustainability, flexibility and customization. Consumer influence has led developers and investors to be more conscious about the provision of buildings to meet consumer demands and expectations.
The question then becomes who is the consumer of real estate in the future? And what is this specific class of consumers looking for? Well, the future lies with the millennials. This includes people born between 1980 and 1996. As this group enters its prime spending years they are likely to reshape the economy. Their unique experiences will change the ways we buy and sell, forcing companies to examine how they do business in the future. Therefore, understanding what this specific class values will help property developers and investors stay relevant in the future.
This group operates in different ways compared to the previous generation of baby boomers. They are just as hard-working as their parents with a different set of attitudes and expectations towards work and space. They have a strong desire for flexibility, experience and fulfilling their purpose. These are social beings who believe in work life balance. They seek affordability because of high unemployment rates and under paying jobs which affects their ability to purchase. Moreover, they want choice without compromising on quality and are looking to be socially responsible. Like all generations, their values are a product of their surrounding atmosphere in which they came of age. They are the generation that grew up with technology, internet and social media.
Their values could influence the future of real estate through the level of technology they use. The tech that comes with e-commerce offers people the convenience to purchase goods and services online and have them delivered to their doorstep allowing them to live anywhere. This will affect how retailers perceive warehouses, their location and the size of warehouses they need. As more people are no longer tied to their work spaces because of the accelerating trend of remote working, big city living will no longer be necessary. For those that still want to go to a physical store or the office this should still be equally possible. However, developers and landlords will now have to ensure that it is more than just about offering people a place to live, work and play.
Furthermore, because of these trends we expect to see more millennials relocating from major cities to towns and villages that are expanding as these offer affordable accommodation. The growth prospects are often located in markets anchored by prominent universities, large medical facilities or major research and development centers. For the younger generation, quality of life is an important consideration when deciding on where to live. Most importantly, strong employment and low prices are an irresistible combination to young families and young companies, whose presence contributes to a solid and more resilient foundation for growth.
The changes in location should provoke developers and planners to start thinking of mixed use oriented cities and towns because they help reorient cities around people and not cars. The concept has been experiencing an accelerated growth due to its sustainability while creating inclusive and connected communities. Cities which are inclusive and connected allow people to travel short distances to access the most basic amenities while improving human interaction. Based on the needs and expectations of millennial this will draw more of them in. By decreasing the requirement for vehicle travel, mixed use developments additionally bring shared local area spaces. These include, squares, parks, and walkways which eventually cultivate relationships among local area individuals.
Real estate, will move from just being a financial asset to more of a service model which provides experiences to people through the technology utilized. E-commerce will increase the demand for distribution and logistics centers. Retailers will no longer occupy single centralized big box warehouses. They will move towards smaller and multiple warehouses that are closer to customers in order to offer convenient and fast delivery services. Certain customers will be willing to compromise space in the name of affordability or a preference for a more communal lifestyle. Nonetheless they will still expect quality features and amenities that improve their experiences with buildings. This will increase the demand for co-living spaces. Similarly, co-working spaces will attract more attention as they will offer flexibility for millennial’s whether as start up companies or individuals.
As a whole, changes in the real estate industry will be inevitable some may occur faster than others. It is therefore important to focus on emerging trends, formulate informed responses, and maintain close relationships with millennial’s.