Come sing along with me… nanana-nah… nanana… nah… hey, hey, hey…
good-bye!
The cities are starting to lose out on the Millennials.
Over the past 10 years, a good number of American cities have celebrated
and been transformed by the young professional and techie Millennials.
Those of us Boomers have watched as the
historic roots of the ‘hoods gave way to apartment “loft” complexes, gourmet
coffee houses and new organic grocery stores.
Now, a number of demographers, social scientists, economists and real
estate consultants are predicting that the growth in demand for urban living is
hitting a stall.
As an article in American Demographics states, “There are already some
signs that the inflow of young professionals into the cities has reach its
peak, and that the outflow of mid-30s couples and new families to the suburbs
has resumed after declining since the Great Recession.
Last week, here in the Atlanta-land, two large in-town real estate
developers scrapped the plans to build two more live-work-play urban
communities.
Is enough now enough... or even more than enough?
The Wall Street journal ran an article about 30 days ago that cited an
intown apartment surplus that is unraveling in Austin, Chicago, Nashville,
Atlanta and Washington DC.
Not only are forecasts beginning to predict an apartment surplus, others are
beginning to predict negative impacts on city budgets as billions of dollars’
worth of new apartments built on the premise that the flood of young people
into the cities would continue…dries up.
I find it entertaining on some levels how the developers, marketers and
city planners believed that Millennials not only would never slow down, they
also banked on the generation never aging!
Another article published on “TheUpshot.com” notes, “Here is one thing that
that we do know: people do get older. And another is that people’s tolerance for
small, “tiny home” living is highest when they are young adults.”
In the 2017 calendar year, the leading edge of the Millennials turns 38
years old and the peak of the the Millennial “bell-curve” caps out at age
29.
That means that the number of
20-somthings is actually now on a decline.
A decline!
The U.S. Census Bureau recently released a report that the number of
people moving into the cities and out from the cities hit a balance point in 2013.
Since then more people are actually moving out to the suburbs than into the cities.
The trendy and hip bars and cafes are following the trend too.
And the driver for the moves is that
the “trendy” and the “hip” is actually more “mass” intown than it once was in
the early waves of urban renewal and gentrification.
As I have written before, the same brands that lined the walk-ways in
the suburban malls are now the same brands that have moved into the urban
live-work-play developments.
Just like “tiny houses” makes a Millennial feel in control, the smaller
landscape of the suburban town squares is a whole lot more personal than the
vast space of the urban warehouses… further divided up into carbon copy 500
square foot loft apartments.
Dowell Myers is an urban planner at Southern Cal (USC) and was featured
in a 2016 Fortune Magazine article about the future of Millennials heading to
the suburbs… in droves.
Myers makes note of “what Nielsen calls the Urban ‘Burbs which are
essentially walkable, loft-style developments that hug actual suburban
and small town town-centers that are trendy and affordable.
He goes on to say that “Millennials love of cities is actually
superficial-driven by the desire to be seen in the trendiest bars. If fashion
appeal is really all the cities have to offer, there’s no reason a
developer-concocted landscape transplanted to a former cornfield can’t satisfy
the same need.”
Two weeks ago here in Atlanta, I went down to where the EXPERIENCE
office was located for a good portion of our years in business.
Inman Park was the first housing
neighborhood built after the Civil War.
Its also adjacent to where Dr. Martin Luther King was born and raised
and where the King Center For Nonviolent Social Change is headquartered
today.
When I was down visiting Inman Park, I was astounded at just how many
Millennials now inhabit the neighborhood. As I was walking past an outdoor café, I asked a table of
Millennials if they had visited the MLK Center.
They replied, “No, but they had heard that the pub had some very
interesting local brews.”
I share this to illustrate that the Millennials are less rooted in the
historic roots of the urban ‘hoods and more in the ability to feel hip and cool
while working the part-time jobs to pay for the student loans and the tiny loft
apartments... that they share with 2-3 other room-mates.
When I moved to Atlanta, I purchased a home in the intown
Virginia-Highland neighborhood. It
was an area that had a sense of charm.
It was also a neighborhood that was undergoing urban renewal largely led
by the gay community.
I sold that home eight years ago.
In my seven years of owning it, it had nearly doubled in appraised value
and the taxes owed on the place each year more than doubled.
Today, it takes about a million dollars to purchase a similar home in the neighborhood.
As the intown neighborhoods gentrify, the Millennails have moved in, but
so too have the costs of entry to own a home. Not only can few Millennials even afford an average priced home, very few can afford to purchase intown real estate... period.
An article in the New York Times this past December noted the following…
“Hip and cool” core cities like San Francisco, New
York and Boston have suffered double-digit percent losses of young
professionals. New York City, for example, saw its age 25 to 34 population of 2000
drop by over 15% — a net loss of over 200,000 people — a decade later. San
Francisco and Oakland, the core cities of the Bay Area, lost more than 20% of
this cohort over the decade, and the city of Boston lost nearly 40%."
So what does this mean to business?
Perhaps the BGO (blinding glimpse of the obvious) is to
avoid getting business revenue tied to a continued prospect of intown
gentrification.
Second, if the business has not looked out in the ‘burbs,
get in the car and go meet the people who are now moving in.
If you do travel out to the ‘burbs, realize that many of
those moving out to the ‘burbs are not necessarily moving out to new, spec-real
estate developments. That model
has changed.
Third, rethink through what drives the emotional
experience of your brand and just how that experience is becoming translated
into the next wave of suburban culture.
Finally, I will end this blog with the simple observation
that a lot of the business and strategic masses out there have not, and likely
will not, understand that this is happening right before their eyes until they
are drowning in the next wave of urban crisis.
I have been very good in this blog post and refrained from
making tongue in cheek commentary, but I will predict that there will be a
share of the techie-geeks, graphic designers and media mavens that be convinced
that the out-migration will all be rooted in who sits in the White House versus
the person whose name is still on their bumper sticker.
Recite with me... "Make Suburbia and Smalltown America Great Again!"
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