What do Millennials, the laidback digital natives dubbed “Generation Me” by social scientists, have in common with the driven, disciplined Baby Boomers who spawned them? Quite a bit when it comes to lifestyles. As Boomers downsize and Millennials finally enter the real estate market, both generations are gravitating towards the same type of housing: multifamily homes in vibrant urban areas.
Ironically, Boomers are opting out of large, high-maintenance homes at the same time their budget-conscious Millennial children are finally buying first residences. Both generations want smaller dwellings in culturally rich cities and suburbs, with restaurants, shopping, services, entertainment and public transportation nearby, notes realtor.com. Multifamily condos fill the bill for both groups.
Yet while each generation has broad similarities, they also have distinct differences. Since both cohorts dominate the multifamily housing market at the moment, notes the National Association of Realtor, builders and developers need to be spot-on in the multifamily housing they target to either age group, and strike an inspired balance of features and amenities in those designed to appeal to both.
Easier said than done? Not in the age of big data. From the analytics-driven research we do at ON Collaborative to understand what resonates with each market segment, it means taking a deep-dive into each generation’s wants and needs to develop hyper-local business plans that maximize each project’s sales velocity and price.
Here are the most salient issues multifamily developers must keep in mind as they design and build their offerings.
Know Each Generation’s Pleasure and Pain Points
Each generation places different demands on multifamily developments. It’s more than a matter of tweaking unit size or making interior design features, common spaces and amenities as impartial as possible. It’s critical to assess what each cohort needs and develop a site-specific mix of elements for each project.
To date, multifamily developers have relied on snazzy Wi-Fi lounges, complimentary gourmet coffee bars and lush community gardens to seduce both cohorts. It’s time to wake up. These features have gone from exceptional to conventional in the last five years. Instead, beefed-up basics and attention-grabbing extras now reign supreme. For both generations, the former means flawless internet reception, community directors, smart controls for HVAC systems, fitness studios to complement workout rooms, larger storage areas, state-of-the-art recycling, electric car charging stations and more. The latter—the extras that dazzle and woo—are singular to each community and analytics-driven.
But long before those extras come into play, we know Millennials and Boomers both favor open floor plans that foster flexibility and interpersonal connectivity; high quality fixtures and finishes—especially in the kitchen; lifestyle enhancing communal spaces and amenities; and pet friendly features such as dog runs and grooming areas. But Boomers favor traditional design features such as fireplaces and moldings; need space for hobbies and leisure activities; demand home offices that can double as guest rooms; and choose walkable communities with parks. Millennials, on the other hand, prefer sleek, unique design features; require affordability; prefer denser neighborhoods with edgy offerings; and need access to major transportation hubs.
Pay Attention To Each Generation’s Values
Despite their many similarities, Millennials and Boomers have different values that multifamily developers must take into account and reflect in their projects.
Take Millennials’ vibrant lifestyle. It’s not just about convenience and activity; it’s an expression of their value for diversity and inclusiveness, according to PwC’s Emerging Trends in Real Estate 2017. They want to be part of a vital community that feels welcoming, flexible and democratic, and where informal hubs anchor social life. And they covet new experiences rather than material possessions. So the more adventurous and unique an amenity, the better, according to our findings. Think game arcades, indoor rock-climbing walls, programming that ranges from out-of-the-box fitness classes to inspired happy hours, shared car services, fully enclosed work stations in common areas and fully-equipped music rooms.
On the other hand, we find that Boomers still place a premium on properties that reflect exclusivity. They value refinement and sophistication, and traditional markers of this quality include doormen, valet parking, concierges and elegant private lounges. Amenities that wow include limo shuttles, driving ranges, spa-quality fitness centers with services and saunas, on-call chefs and temperature-controlled wine rooms. Analytics can help developers determine the best options in each market.
Consider Each Generation’s Resources
Budgets are always a key consideration, especially since the disparity between these two generations is most evident here. But ultimately, neither cohort will buy places that don’t have the features they covet.
For instance, even though Boomers are downsizing, space is still their holy grail. They want room to entertain, accommodate grandchildren and guests, work at home and pursue hobbies. They want and need larger units than Millennials—and can afford to pay for them, along with top-shelf amenities that promote wellness, safety and reduce stress. Trending options include maid, laundry, meal and personal valet services; state-of-the-art gyms with personal trainers; tech-enabled smart lighting that supports natural circadian rhythms; and biometric security and alert systems.
Though Millennials have less money to spend, they’re more flexible and adept at making trade-offs. They weigh unit size against other assets—especially location and quality of amenities. Because Millennials love anything that’s new and cool, they’re willing to give up unit space if it means access to hot neighborhoods, major transportation hubs, smart appliances, state-of-the-art fitness facilities, doggie daycares, rideshare services and grocery delivery.
Know Each Generation’s Commitment Level
Here’s where the generations differ the most: As homeowners, Millennials are at the bottom of the ladder and Boomers are at the top. To the former, a multifamily property is a “home for now” and an investment rather than a permanent commitment, notes Millennial Money. But for Boomers, this is often the last rung on their housing ladder. At or near retirement, they want multifamily units that will be permanent to avoid the hassle of moving again. And that means buildings with the services, facilities, amenities and units that will allow them to age gracefully in place and maintain the independence they prize.
Despite the two cohorts’ very different reasons for buying, units that will “wear well” and can be adapted to future tastes are essential—and achievable with analytics that gauge each development’s target market, geographic requirements and mitigating trends. And while pleasing both cohorts in the same project can be a balancing act worthy of the Cirque du Soleil, it too is possible with an analytics-driven approach. It takes precise data and astute analysis to consistently strike the right balance between the inclusive, informal community spaces that Millennials prefer and the more exclusive and refined facilities and services that resonate with Boomers.