Q&A with Howard Barash, Principal with CohnReznick Advisory Group
- Mar 18, 2016
Millennials have just beat Baby Boomers as the largest demographic group in the United States, and are changing the shape of today’s real estate market for developers. Multi-Housing News spoke with Howard Barash, principal with CohnReznick Advisory Group, who shared his views on the opportunities developers have in appealing to this young, technologically driven demographic.
MHN: How are millennials driving change across the multifamily industry?
Barash: With 92 million strong–the largest generational population–Millennials are truly a unique group whose needs are driving changes across the multifamily industry. Millennials have grown up during the technology age and are the first generation to experience sharing economies. These social butterflies are staying single longer, which typically leads to a delay in home buying. This generation also has a limit on what they can afford, especially in the aftermath of the 2008 recession, because of depressed wages and student debt, resulting in a growing “renter generation” unable or unwilling to purchase real estate. The Harvard University study, “State of the Nation’s Housing 2015,” reports that, of the estimated 22 million households that will be formed from 2010-2030, 59 percent will rent and 41 percent will own. Today, 64 percent of American families own their homes (although this number has been steadily dropping.)
Nielsen reports that 62 percent of millennials indicate they prefer to live in the type of mixed-use communities found in urban centers, where they can be close to shops, restaurants and their offices. The average starting salary for the graduating class of 2015 was $50,561, which means that millennials cannot afford most apartments in the big cities that employ them. Due to millennials’ inability to finance luxury apartments, developers find themselves in a balancing act of building high-quality units that offer desirable amenities at an affordable price. To accomplish this, developers are building smaller units in desirable locations that feel modern and unique.
MHN: What should developers be doing to meet the demands of the newest generation of residents?
Barash: Developers need to design smaller units that can charge more per square foot, yet the total cost of the unit is cheaper for the tenant than larger, less luxurious apartments. Developers should appeal to the millennial’s desire to be social, featuring amenities such as rooftop lounges, fitness centers, club houses and other community shops. All of these onsite facilities must be tied in electronically. The key is to connect the technology millennials use in their everyday life with the building’s technological functions, so doors, lights and air conditioning should all be controlled by a click of their smart phone.
In addition to tech innovation, millennials still expect traditional features such as close proximity to mass transit, restaurants and entertainment. Multifamily developments must integrate package management solutions for their residents, and we’re seeing a huge demand for bike storage as fewer millennials own cars. Developers should offer residents the full package encompassing a social, digital and eco-friendly living space that gives tenants a convenient and comfortable place to call home