Browse Tag: Generation Y

Downtown Restaurants And Apartments: Looking Up, Building Up

petula clark- downtown

The flight from urban centers to the suburbs that characterized much of the latter half of the 20th century is seeing a reversal. Collar communities across the US are facing rising vacancy rates as a generation of thirtysomethings and younger are breaking the pattern of previous generations by seeking life and work spaces close to each other, without long maddening commutes.

The urbanization trend has a lot of factors driving it. Depending on who you ask, the answers given to explain this shift point to the rise of always-connected technology-enabled life- and  working-styles. Some point to somewhat fanciful ideas about “Generation Y” kids growing up in over-secure, helicopter-parented childhoods looking for the risks of urban life as a way to establish independence at long last.

Whatever the reasons, the shift in urbanization is real. Market research by IBISWorld highlights the trend in terms of hiked multifamily construction starts and other growing measures like rentals in urban centers. Put simply, a city apartment boom is underway, and a lot of industries are going to feel the benefit.

“As the US economy picks up during the next five years, both the rate of urbanization across the country and the per capita income of urban residents are expected to accelerate,” according to the IBISWorld report, titled “Moving on up: Top industries to benefit from urbanization.” Along with apartment construction, these shifts will lead to growing demand for testing and educational support, single location full-service restaurants, apartment rental, street vendors and public transportation.

Although operators in these industries are not anticipated to encounter a lack of demand in the next five years, “they are expected to face more intense competition among peers for market share within the rapidly growing urban markets,” the report states. “The benefits of urbanization, though, will increase the number of workers and establishments operating in these industries.”

Driving the demand apartment boom in part is the rapid growth of companies in the healthcare, technology and finance sectors. “These industries are attracting an increasing number of young professionals and college graduates, a demographic that has boosted the population of urban areas,” according to the report.

Accordingly, IBISWorld expects revenue for the apartment and condominium construction industry to increase at an annualized rate of 3.7% in the five years to ‘19. Profit margins for the rental industry have lagged the 9.1% annualized growth seen by the construction sector since 2009, though, and will continue to lag over the next five years, albeit not quite as dramatically: 2.5% annual growth, compared to 3.7% for builders.

The Takeaway For Multifamily Professionals

Suburban apartments and condominiums can only feel the most disruption from the interruption of the decades-long migration pattern from downtown to the boonies; multifamily markets markets in many collar communities are likely to get tougher to rent, and building starts are likely to become harder to finance.

 

Aggressive marketing in billboards (as in above, a campaign in Chicago promoting the western suburb of Berwyn)  and on public transportation is likely to pick up in major cities; professionals working suburban markets should be organized into effective Chambers of Commerce to mount such campaigns.  The suburbs can’t count on old migration patterns any more.

Tomorrow’s Office Workers And Their Spaces: Patricia Lynne At NAR Annual 2011

What’s coming tomorrow?  Wouldn’t we all like to know?  That was the message at the jammed  NAR 2011 Annual session “Views From The Frontier Of Commercial Real Estate.”  What will we be doing in our offices?

Well, never mind traditional offices.

“Hold up your smart phones,” said Patricia Lynn CCIM, speaker and principal of consulting firm Lynnk.  “These are the office of the future.”

In a presentation long on thoughtful asides about the state of office utilization patterns and demographic changes, Lynn spelled out the four principles of the future office worker profile:  Talent, Technology, Transportation and Tolerance.  Creative talent, high technology, high mobility, and social tolerance.

Tomorrow’s office worker, culled from a US population growth that appears on pace to hit 450 million in 2050, will be of the creative class, saud Lynn.  “These are the knowledge workers, who think, and use technology creatively and who want to be near other knowledge workers.”  Today, 30% of the workforce is in the creative class – but Lynn says the number will climb to 50% in just a few years. The more she spoke, the farther away the traditional conception of the office cubicle farm faded into the mists of history.

The millenials (that generation sometimes dubbed “generation Y”) working habits and office needs are radically different from what the industry is used to providing.  They tend toward “fun, multitasking, collaboration, and no boundaries between work/home/family”.  This translates into office space with fewer fulltime employes per square foot, or as  author Jim Heid put it: “The office of the future is no office.”

Not quite.  It turns out that there’s office space in the future, it’s that the millenials are using three distinct places: the traditional corporate HQ about 30% of the time, the home office another 30% of the time, leaving a giant opportunity in what Lynn called “the third place – a kind of Starbucks on steroids.  Slides followed showing new working spaces based not on lease occupancy but on membership – anywhere from $150-$425 a slot – where the millenials stop to connect, collaborate and create.

Get a full copy of Lynn’s presentation at PlaybackNAR.

 

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