By Melanie Reuter
The ongoing discussion of “What do Millennials want when it comes to housing?” is becoming clearer as the generation moves out of their parents' homes and into their own.
Now the largest demographic in the United States, (and likely to be confirmed in Canada, as well, with the latest Census coming out later this year), the 25 to 34ish age group is truly shaping the housing market. In large cities across North America, some of this demographic is already commanding salaries in the six digits, and their spending power is finally rivalling that of the Baby Boomer generation. Many are choosing to continue to rent for a variety of reasons, including high real estate cost, but don’t discount that one of those reasons is to get exactly the type of home they want in the location they want. Renting may be the only way to make that happen and it serves an ever-changing list of housing desires.
Make no mistake, in urban centres walkable neighbourhoods are number one on their list of wants. The ability to shop, socialize, work and live in a compact centre draws the largest number of Millennials.
And the first generation of its kind is demonstrating that size doesn’t matter – providing cool usable amenities are the things that count. Developers are continuing to find success with buildings that have smaller units, even fewer amenities IN the unit, in exchange for shared space. Rooftop veggie gardens, shared work/meeting space, multi-media rooms are showing popularity.
Developers of mixed use buildings are even forsaking the traditionally safe anchor tenant – the financial institution, drug store, government office - for commercial tenants with cache. Think about a sidewalk café, pub, or trendy restaurant as a draw to Millennial tenants – Millennial tenants who are willing to pay more rent for the uniqueness of their building. So, although there may be more turnover, as hospitality-type commercial tenants are less stable, the risk is offset by higher residential rents.
One developer in the Millennial-rich city of Seattle (with a median Millennial salary of $55,000 US according to PayScale) sees tremendous success in his developments located near large employers who hire from this demographic (think Amazon, Starbucks, Microsoft). By incorporating socially–conscious tenants such as organics stores or farm to fork style restaurants, the often touted “most thoughtfully raised” generation is happy to move in and pay more.
Melanie Reuter is the Director of Research with REIN and a Real Estate Investor owning both single and multi-family units. She has a Master of Arts Degree from California State University, San Bernardino and a BA from Simon Fraser University in Burnaby, BC.