The Urban Land Institute's annual study, Emerging Trends in Real Estate, provides yet more evidence that young people, aka GenY (born between 1979 and 1995), prefer living downtown close to work, rather than living in the suburbs and commuting. This is rapidly changing the residential and office marketplace as walking and biking become more important.
Lori-Anne Beausoliel, a partner at PWC (which wrote the study for the ULI), tells the Financial Post:
“The kids know exactly what they want as it relates to office. We have a whole urbanization trend. While before it was we want to be out in the burbs, people want to be in the core. People want to work eat and play all in the same area. Part of this is we don’t have the infrastructure so you either face hours of traffic or you can be walking distance or near transit.”
The study notes that infrastructure issues like clogged highways and rush hour traffic are a problem, but not the only reason the change is happening. "The choice to live in cities is no longer economic, but has now become cultural." From the study:
The growth of generation Y and its impact on all sectors of commercial real estate could be the singular most dominant trend for many years. This group lives, works, and plays in dif- ferent ways than previous generations. The impact will be felt by all real estate sectors. This generation will be more urban and less suburban; they won’t want to drive as much but will want to be mobile. From intown rental housing to collaborative office space to close-in warehousing to ensure same-day delivery from online retailers, gen Y will be a noticeable force in shaping commercial real estate. All of these trends will have a significant impact on real estate. Referred to as a “‘powerful engine” by an investor, this generation “will be very good for real estate.”
On the other side of the demographic shift, the baby boomers also will drive change as they age; many will sell their homes and move to urban locations with similar amenities as those desired by gen Y (but with the added amenity of convenient health care).
Interestingly, for all those people in cities where transit projects are being questioned, the study shows that access to good transit is moving up the list of things people think are important when they are deciding where to live.
Get a summary or download the whole massive study here.