How Changing Demographics Are Shaping The Future – Part Two: Millennials

In PART ONE of this post we took a look at how the baby boomer generation is primed to impact the future of the economy in a big way, affect market trends and influence the commercial real estate industry in the coming years.

Today, in part two, we’ll be taking a look at their equally economically powerful counterparts, millennials.

Team working at a start up

To briefly recap, the baby boomer and millennial generations comprise a combined 61% of the total population.  This means that their likes, dislikes and even mere preferences hold a lot of sway on the future of the market and in turn the future of the commercial real estate industry.

By shifting the focus away from property types and onto the types of generations who live, work and shop in those properties, we can gain new insights and examine possible trends for the coming years.

Now that you’re all caught up, let’s examine how millennials are already shaping the future of the marketplace.

Born between 1980-2000 and totaling about 80 million Americans, millennials spend approximately $600 billion annually already.  By 2020 when the majority of them will have entered the workforce, they are expected to be responsible for a much as $1.4 trillion in spending per year, representing 30% of total retail sales.

With that in mind, let’s examine a few of the millennial trends that are set to have the largest impact on the commercial real estate industry in the coming years.


First, millennials are going to have a big impact on the future landscape of office spaces.  This is due in large to this generation’s preference to view the office no longer as a place dedicated to individuals tasks, but as “a meeting place for a diverse group of people to gather, share and collaborate,” stated a report by Jones Lang LaSalle.  The report when on to explain that, “offices are becoming places where people with common goals, but diverse sets of skills meet to generate new ideas.”

However, not only is the interior landscape of our office spaces and the dynamics of how we function within the walls of those spaces set to shift, millennials are also having an impact on the very location of those offices as well.


More than anything millennials crave community and collaboration, and this translates into a deep love of mixed-used, walkable, live, work, play environments.  And while many millennials are being drawn to urban downtown areas for this very reason, research has shown that the suburbs are not dead. However, if they wish to adapt to this shift in demand will have to prioritize creating mixed-use, walkable neighborhoods that are transit accessible.

One interesting impact that the, tech savvy, online shopping, millennial generation will have on the commercial real estate industry in the coming years is in the industrial sector.


With the rising demand for online shopping and faster delivery times, comes an increased demand for industrial distribution and fulfillment centers.  “An estimated 30 percent of the U.S. industrial big-box demand has a correlation to e-commerce, and this will not abate anytime soon. Major retailers continue to open new fulfillment centers that offer access to the nation’s key population centers and infrastructure, and are opening smaller centers to enhance coverage in secondary markets.” stated La Salle.  “Currently, around 59% of the country’s population shops online; millennials, a generation raised on technology, comprise the majority.”

Lastly millennials place a large priority on price, having lived almost half their life during the great recession, “they habitually use mobile devices to compare prices while shopping in stores and tend to favor value-oriented retailers like dollar stores, second-hand stores, drug stores and off-price retailers,” commented La Salle.  Shop’s topping the millennials most visited list include: Forever21, Old Navy, Marshalls, Target, Walmart, Macy’s, Kohl’s, TJ Maxx, Urban Outfitters and JCPenny.

Millennials are a tech-savvy, ambitious generation who want to be “in the know,” love to participate and engage, crave authenticity, are tremendously influenced by their friends and want to make a difference with their lives.  But it’s also important to keep in mind that these millennials are just now coming into their own, entering the workforce and about to start families.  Keeping tabs on this demographic over the next several years will give many investors a leg up to be prepared for the shifting demands of the future marketplace.

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If Someone Says “Live, Work, Play” Just One More Time…

I know that the terms “mixed-use development” and “live, work, play” have become social buzzwords in the commercial real estate industry. And I’m sure many are left wondering what’s behind this latest craze and if it will be just that, a passing fad. Will “mixed-used developments” and “live, work, play” be the bell-bottom jeans of commercial real estate history 50 years from now?

However, the fact of the matter is that “mixed-use developments” and “live, work, play,” like a lot of things in life, are actually extremely old concepts that we’re only now rediscovering the value of. In fact, at one time in history the idea of not functioning within a mixed-use community would have been down right terrifying to people.

Where Did This Idea Come From Anyway?

Braun_Milano_HAABThe most perfect historical examples of early mixed-use, live, work, play communities are probably the medieval villages of the 5th-15th centuries. Densely built within towering city walls, the medieval village is the perfect example of a functional, productive community, incorporating all the rules of mixed-use development. This way of living not only benefited them socially in a variety of ways, but it also served to provide them protection as well, since the walls were able to protect the village more securely than if the villages were spread out over many hundreds of acres.

In fact, this way of living and structuring society was the norm, even in the US, up until the early 1900s when development trends and patterns changed radically with the advent of the trolley and the automobile.

In addition to people having access to more efficient modes of transportation, the population in the US was also exploding at this time and as American cities swelled to dangerous levels, local governments began to mandate segregation of land uses – for the health and welfare of it’s citizens.


At the time, this seemed like a brilliant idea. If city planners could divide their cities up and create different “zones” for different uses or functions, they could then nicely organize the cities of the future for maximum functionality and safety for it’s citizens. Retail, work, living, schools, etc were all segregated from each other and from about the 1910s through the 1950s the idea of integrated land uses were rare in new developments.

However, as time went by city planners began to see a plethora of unanticipated side effects from the new urban sprawl they had created such as: increases in vehicle miles traveled, energy consumption, pollution, loss of resources lands, inefficient provision of infrastructure and public service costs, central city decline and many other psychic and social costs.

And around the late 1970s and 1980s mixed-use developments began to reemerge. However, the projects were on a much smaller scale than their predecessors and were most often integrated into urban contexts such as historic structures or districts.

Then towards the end of the 1990s and 2000s, mixed-use developments began to emerge as manifestations of sustainable design, walkable urbanism and “smart growth” initiatives. They became integral components of “Transit Oriented Development”, “Traditional Neighborhood Developments”, and were considered an essential ingredient to the creation of “Livable Communities.”

But What Are The Benefits To Us Now?

But the question that still remains is why? What benefits are there from moving towards a more mixed-use, live, work, play society?

Well in addition to helping diminish the negative side of effects of America’s urban sprawl mentioned above, it seems that mixed-use developments and live, work, play communities can serve other vital roles in our success as a city as well.

vintage-paris-ladies-coffee-shopThe first of these benefits is the opportunity for knowledge spillover. In essence, when you have a high density of people living and working in a small community together, there are more opportunities for those individuals to meet and spend time together socially. During those social interactions is when we as human being exhibit our highest transfer of tacit knowledge to other individuals. And it is this spillover of tacit knowledge that can help spur innovation through the sharing of ideas. This in turn improves the performance of the local economy.

Secondly mixed-use developments can also spur other economic growth through the creation of a localized marketplace. When people live, work and play in a small area, they are more inclined to spend their hard earned cash in that same area. This give and take between the community members strengthens the local and regional economy and helps bond community members together.

Third is that recent studies have shown that walkability and mixed-used neighborhoods encourage the development of social capital. In essence, people in walkable neighborhoods are more likely to feel connected to the community and trust the people in their neighborhoods. This is important, because as human being, in order for us to live a full life and feel fulfilled, we need to have a home life, a fulfilling occupation and interaction within a community. And although interaction within a community has been proven to be crucial to our well-being, the number of places individuals receive this sort of interaction around that US has increasingly diminished with the rise of the automobile-oriented suburb, which in turn has lead to a decline in community bonds. The resurgence of mixed-use developments is one way city planners are beginning to combat this.


And these are just a few of the social/economic benefits associated with mixed-use, live, work, play communities! Many of which our community is already starting to see the first inklings of with the redevelopment of Downtown Huntsville and their focus on creating a vibrant live, work, play environment. Mixed-use developments such as The Avenue, Twickenham Square and City Centre will only add to these efforts and help to form deeper connections between the people of Huntsville and their local community and help continue to foster an environment of innovation and inspiration.

Make sure you’re staying on top of the latest trends, newest developments and hottest new stores in Huntsville by subscribing to our weekly blog updates!