Millennials and Commercial Real Estate

By David Smith

“Millennials are killing [insert item]…”

Generational descriptions are often broad stereotypes utilized (by those not in the generation in question) to identify everything “wrong” with the newest generation of workers or students. In this way, millennials have been blamed for destroying numerous products and industries (e.g., cereal, bars of soap, marriage, home ownership, etc.). Millennials—commonly cited as those born in the 1980s and 1990s—have been a hot topic for the past decade as they have become the largest U.S. generation in terms of population, the largest generation in the workforce, and make up almost all of the key 18- to 34-year-old advertising demographic.

Millennials have been the focus of companies’ young talent recruitment efforts for 15+ years, and now they are an increasingly large portion of leaders in those organizations as the oldest of them are entering their late 30s. Organizations are no longer just planning around millennials, they are being led by millennials. What do we know about how millennials are different from (and the same as) previous generations? And, what does all of that mean for commercial real estate?

• Engagement: Millennials are the least engaged generation in the workforce according to Gallup, Inc. Only 29% of millennials are “engaged” as compared to a third of employees in the Generation X and Baby Boomer generations. It is noteworthy that millennials are also the least likely to be “actively disengaged,” while they are more likely to be in the middle (“not engaged”). Cushman & Wakefield’s consulting research shows that millennials have weaker views of some key aspects of their office working experience, including provision of privacy space, stillness space, and the type of space needed for “we” interactions (such as small group meetings).
• Flexibility and Workspace: According to Deloitte, millennials who work at companies that deploy flexible working have much more positive views of their experience, their own effectiveness, and even their company’s performance. Occupiers are increasingly looking at ways to offer flexibility while also creating a working environment that draws employees in and creates the type of interactions and environments that build company culture, increase interpersonal trust, and encourage innovation and collaboration.
• Delayed Life Changes: Much of the press on millennials has been around their draw towards urban living. It is true that they have been part of a shift toward city centers that has powered renaissance and growth in many CBD markets. As a generation, they have remained renters for longer – partially due to lifestyle preferences, but also because of record-breaking student loan debt and deflated earnings coming out of the Great Recession. Millennials are now the largest group of home buyers, and the majority of homes they purchase are in the suburbs. The next few years will see millennials continue to get married, have children, buy houses, and move to the suburbs in similar ways to previous generations.