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We hear a lot about the generational differences between Millennials and their Baby Boomer parents (see: Okay Boomer). As is common between older folks and younger ones, there’s plenty to disagree on; from work ethic to life goals to the acceptance or denial of new societal norms.
It’s to be expected. Our culture has experienced an intense pace of change in the last 50 years. Of course different age groups would form different opinions, and feel strongly about them as well. Interestingly, however, when it comes to one very important issue, Boomers and Millennials share more in common than you would think.
Desires and demands for housing between the Millennial and Baby Boomer demographics are surprisingly similar. Sure- there are some differences in the details. But by and large, both groups are gravitating towards the same kinds of qualities when choosing their native neighbourhood. Developers are calling this shared philosophy New Urbanism.
What is New Urbanism?
According to the Congress for the New Urbanism (CNU), New Urbanism is a movement focused on “human-scaled urban design”. That means pedestrian-friendly infrastructure, accessible public spaces, shopping and amenities close-by, and a general emphasis on walkability. Similar to living in a downtown core (and sometimes contained within a downtown core), these communities provide residents with just about everything they need, within walking distance of their home.
Unlike suburban neighbourhoods in which residents need to hop in the car to travel to the nearest “big box” mall, New Urbanism speaks to the social, locally-minded, environmentally-conscious Millennial demographic, while simultaneously providing an ideal setting for the aging Boomer generation. And while these neighbourhoods are popping up in suburban areas, we also see the New Urbanist ideology informing the gentrification of industrial or warehouse spaces contained in urban centres.
Why it works for Millennials
According to Forbes[1] magazine, Millennials share a set of values that includes 5 key points:
– They believe in collaboration
Sharing is the new owning. Co-working spaces, ride-sharing services, and crowdfunding are the mainstay for a generation that believes in the importance of co-creation.
– They are social
Whether online on social media platforms, or in-person at community and social events, Millennials value their ability to connect with their peers.
– They value technology
The expectation for Millennials is that their access to technology should be seamless. This also means that emerging technologies like Smart Home platforms are likely to become the norm.
– They seek experiences
Millennials prioritize work environment over salary, and many eschew the idea of owning a home in favour of expendable income for travel.
– They value their values
Millennials are a generation that will put their money where their hearts are. More than 50% will buy from companies that support the causes they care about. They’re twice as likely to care about organic food than other generations.
New Urbanism presents Millennials with thoughtfully-designed communities that deliver on all of these 5 tenets. Walkability means fewer cars, and lower greenhouse gas emissions. Shared public areas like parks create a sense of community. Nearby shopping and dining provides adequate opportunity for socializing, while speaking to the “buy local” movement.
Millennials are statistically the most “migrative”[2] population. If a development can echo the ethos of their generation, the “neighbourhood experience” is far more likely to draw these residents in. Further, two thirds of Millennials are renters, which supports a healthier urban housing stock[3].
Why it works for Boomers
Ironically, the Baby Boomer generation is seeking a similar set of priorities for housing as they age. Though the root values driving the decisions may be slightly different, the end result is very much the same.
Within 10 years, even the youngest Baby Boomers will be over the age of 65. That being said, this is a generation that has completely redefined aging. Unlike their parents’ generation, Boomers are demanding that their twilight years be healthier, more active, and anything but boring.
This is the generation that brought us Woodstock. Social justice. Rock and Roll. The Women’s Movement. Think Richard Branson and Oprah Winfrey. They won’t settle for bingo nights and crosswords. They want to continue living a vibrant lifestyle that includes social engagements, cultural events, and dining, while also supporting their health and wellbeing.
Baby Boomers statistically want to age in place. They do not want to move to a nursing home, instead preferring outpatient care to a traditional retirement community. To support the needs of this demographic as they age, New Urbanist developments are being built to accommodate ambulatory transfers and nurse visits to site. The fitness amenities that Millennials demand, such as pools and gyms, provide equal benefit to an aging population.
Walkability presents seniors with the ability to stay physically fit while accessing the services, restaurants, and shops they need, all contained within their own community. As Baby Boomers continue to “downsize”, selling off the homes in which they raised their families, they will undoubtedly be looking for a lifestyle trade-off. The New Urbanist philosophy presents an ideal match.
What developers need to consider
Whether a developer is building townhomes, condos, or apartments, it’s wise to consider the demand for New Urbanist features. Some factors include:
Financing
Securing financing for a New Urbanist development can be challenging for several reasons. Firstly, given the fact that the development will contain multiple uses, the risk is multiplied. Lenders may be wary to finance something riskier than a typical single-use project.
Second, New Urbanist developments tend to increase in value over the long-term. However, standard accounting methods and evaluation of ROI tend to favour the short term. Further, multi-use projects require substantially more front-end equity.
One solution would be to divide the investment into “traunches”, or chunks of debt, based on the term and risk rating, and to approach a variety of lenders to participate in different phases of the build.
Affordability
For a New Urbanist development to remain true to its values, it must contain affordable housing and a mix of owned and leased units for residents, as well as large and small commercial spaces (also for lease or sale) to encourage both established companies and smaller entrepreneurs.
Legal structure
Given the characteristic market segmentation of the real estate industry (and the diverse nature of a New Urbanist community), it is unlikely that any one developer would handle the entire project. As parcels of land are leased or sold to other developers, the master developer must have a legal structure in place that will ensure that all participants work together to fulfill the long-term vision of the development. Controls for land use, construction, and maintenance will all need to be in place.
Business plan
New Urbanist developments have lofty goals. For the project to succeed, it’s critical that the entire strategy is contained in a thorough business plan, alongside a complete and accurate set of books. For Developers considering utilizing new technology or green technology, the business plan should also include any government incentives that pertain to that investment (for example, the SR&ED credit).
The Canadian government began providing funding for infrastructure projects in 2016. Funds are allocated based on the environmental sustainability of the project. If this remains part of Trudeau’s climate change mandate going forward, developers may be able to avail themselves of this capital. Further, the immense amount of press around these grants has provided developers with the ability to both become aware of what “the competition” is up to, as well as to take advantage of the press for the sake of increasing consumer demand.
New Urbanism and your project
If you’re curious how your land development project can better address New Urbanist philosophy, reach out to our team today. Our Real Estate professionals pride themselves on their knowledge of cutting-edge trends, providing innovative financial advice that connects our clients with their goals.
For more information, give us a call at 416.256.4000.
Suggested supplemental insights:
3 innovative real estate opportunities to watch in 2020
[1] Forbes, “For Small Business Week: All about Millennial consumers and Millennial-friendly customer experiences”, https://www.forbes.com/sites/micahsolomon/2018/05/03/for-small-business-week-all-about-millennial-consumers-and-millennial-friendly-customer-experiences/ – 1c3640972f91
[2] Medium, “Millennials: The Re-urbanization of America”, https://www.forbes.com/sites/micahsolomon/2018/05/03/for-small-business-week-all-about-millennial-consumers-and-millennial-friendly-customer-experiences/ – 1c3640972f91
[3] Architect, “Study: Millennials’ impact on workplace design and urban planning”, https://www.architectmagazine.com/practice/study-millennials-impact-on-workplace-design-and-urban-planning_o
