Millennials Are So Last Year: Commercial Real Estate Developers Build With Gen Z In Mind
This article originally appeared on Bisnow.com and was written by Melissa Oyler
Welcome to Generation Z’s influence on commercial real estate.
Multifamily and coworking locations will be earth-friendly. Increased food delivery demands will require larger commercial kitchens. Retail spots will become a place to do something rather than buy something.
The next generation of consumers is already influencing the next phase of real estate. Generation Z has been defined as anyone who is born after 1996. The eldest Gen Zers are now 22, coming into adulthood and beginning to have purchasing power.
Today’s youth will be the drivers of change, and other generations will eventually catch on, Ernst & Young Executive Director Marcie Merriman said. Merriman is an expert on cultural anthropology and brand strategy. She helps prepare C-suite executives for what future consumers will expect.
“The real focus should be in how we understand youth culture,” she said.
Take a look at how the core five commercial real estate sectors are already incorporating the demands of Generation Z:
Apartment living will evolve, from how people select their flats to who they choose to live with. Access to technology has encouraged Generation Z to keep childhood friends for life. Merriman said her 15-year-old daughter still keeps in touch with people she met at camp seven years ago.
“Even with millennials, with friends you met at camp, you’re best friends for the summer, then you go your separate ways,” she said, adding that these lifelong Gen Z connections will influence the sharing of living space. “What constitutes family will be very different,” Merriman said.
Environmental considerations will also be hugely important to Generation Z. Before, someone might have simply been looking for a three-bedroom place with two bathrooms, but Gen Z renters will take interest in granular details like the types of building materials used to develop complexes and how kindly workers on the projects were treated, Merriman said.
Locations will be largely chosen based on environmental factors and a desire for a sense of community, she said. No longer will it be acceptable to pollute the air with too much driving, and suburbs will continue to morph into true cities-within-cities.
Technology will continue to play a big role in the continued desire to live seamlessly, including hands-free technology to handle basic tasks, including turning off the lights, changing temperatures and entering the apartment.
Restaurants will evolve in one of two ways, Merriman said.
Food delivery will become increasingly more popular, and not just traditional cuisine like pizza and Chinese food. The rise of restaurants adding delivery components to their brands may lead restaurateurs to expand their kitchens, reducing dining room footprints.
“I live in Columbus, Ohio, which is a test market for everything,” Merriman said. “We have 15 food service deliveries here. I travel for work and I’m surprised when I can’t get these things.”
When this younger generation does go out, it will be to commune with family and friends. Restaurateurs could end up building larger, community-focused dining rooms as a result, Merriman said.
Generation Z has only known a world in which anything can be delivered at their front door.
“They grew up with that natural expectation,” Merriman said. The gap will continue to widen between those filling food delivery needs and those filling community needs.
With Gen Z’s future retail purchasing power, the in-store environment will come to serve a different purpose, Merriman said.
Retailers who have entered the scene since the rise of omnichannel will have an advantage. They won’t be held to the same quotas as ones who focus only on direct sales to consumers. Success will begin to be defined in other ways, Merriman said.
Before, in-store events were a traffic driver. Next, they will be a brand driver. When wine tastings or classes first became popular, it was with the intent of increasing foot traffic, leading to more sales that evening. Future successes won’t be weighed on how many immediate sales were made, but on building relationships. Trends will focus more on brand engagement and the idea of selling consumers something later, perhaps even online.
“They won’t think of brick-and-mortar as a place to buy stuff, but a place to do stuff,” Merriman said.
Gen Z will also usher in a demand for transparency in materials, Merriman said. This will be different from Generation X, which prided itself on catch phrases such as “Shop till you drop” and “He who dies with the most toys wins.” Millennials introduced the concept of minimalism, but Generation Z will drive that simplistic notion home even further with ethical demands.
“There will be a guilt aspect associated with having things,” Merriman said.
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