Everyone
is talking about millennials today. Economists, pundits, politicians and
business people have all weighed in, as their generation became the largest
proportion of the overall workforce in 2015.
What
effect, if any, is this having on the commercial real estate market?
Many of
the most significant effects are driven by this generation's dramatically
different habits of work, play and travel. From alternative commutes to remote
work, any business that employs millennials needs to address these factors and
structure their organizations and real estate accordingly.
The rise of telecommuting
Simply
put, millennials love telecommuting and working from home. Deloitte's 2016 Millennial Survey confirmed a few key
insights about them:
●
43 percent of millennials currently have the ability to work
from home.
●
75 percent would like to and think it would positively impact
their productivity.
●
88 percent want the opportunity to work with flexible hours,
starting and stopping on their own schedule.
The
practical effect of this is a reduced need for office space on any given day.
In some cases, employees will share desks or rotate freely through dynamic,
open-plan offices. Senior millennials in executive positions are equally
enthusiastic about this dynamic - according to Deloitte, 56 percent of those in
this category enjoy the ability to work remotely and on a flexible schedule.
Moving
forward, scaling up an enterprise and hiring new staff won't necessarily
obligate a business to acquire the same square footage they might have needed
before.
New priorities for location and lifestyle
Just
because millennials don't prioritize office space the same way, however,
doesn't mean that CRE professionals can't market to them effectively. One of
the biggest differences between them and previous generations is their
decreased willingness to endure long commutes.
Millennials
just aren't as car-centric as their parents in general - in fact, a study from the
University of Michigan showed that only 60 percent of 18-year-olds now hold a
driver's license, down from 80 percent in the 1980s. An analysis of millennials'
driving habits versus those of Gen X and Gen Y by a professor at the
University of North Carolina found that the reasons for this were varied, but a
changing - and largely negative - view of cars was responsible for as much as
half of the decrease in total driving miles.
As a
result, many young people must be willing to compromise in other areas,
including the neighborhoods they live in and the size of their houses and
apartments. A business that seeks to hire a significant number of millennial
employees should take these factors into account.
In
addition, increasing use of mass transit changes the favored location for an
office significantly. Spaces near major commuting and transport hub may
continue to rise in value, while those located farther afield in places where
commuting by car is the best option may see demand drop.
How to tackle these changes
It's time
to break with some of the conventional wisdom of how to manage partnerships seeking
office space and commercial real estate. Increasingly, these businesses will be
staffed, managed or even owned by millennial entrepreneurs.
It's
critical to understand your local geography and get a grip on how people are
commuting, where they prefer to work and how far they're willing to go.
The market may be
changing in several key areas, but that doesn't mean opportunities are going
away - you just need to know where to look.
Sarah Carson, Marketing Director
scarson@nainorwoodgroup.com
NAI Norwood Group
