“Millennials” and “disruption” are two words commonly quoted in quick succession. Whether it be the rise of veganism, the recognition of a multitude of gender identities, or the destigmatization of mental illness, Millennials are often cited as the driving force for change. We see many of the characteristics of this generation also embodied by Generation Z. Together, these two generations account for 50 percent of the world’s population and will become an even more powerful force for change over the coming years. Therefore, understanding how they want to interact with buildings is integral to providing successful spaces no matter what real estate sector you are operating in.
The Birth of Experience
Life is all about timing, and today’s younger generations haven’t had much luck. Changes to the tertiary education system in many countries around the world have seen them saddled with ever greater levels of debt as they finish their studies. Compounding this, due to the Global Financial Crisis (GFC) and the ensuing worldwide downturn, they have experienced the weakest economic growth during their first decade of work. As a result, they have lower real incomes and, at an individual level, more debt than other generations at similar life stages. But instead of feeling trapped by their financial situation, Millennials have embraced the additional freedom that comes hand-in-hand with less responsibility and have sought to become rich in experiences.
A World Full of Opportunity
As the first generations to have had the internet for most or all of their lives, Millennials expect to be able to access it all with one swipe of their smartphones. To mirror their lifestyle choices, highvalue is placed on convenience, flexibility and simplicity. Modern technology has overhauled the consumer experience to meet their expectations. For example, Netflix has long rewritten the film rental market, so much so, that fines for late returns are a distant memory. Uber, Airbnb and Spotify are all now globally recognized brands with other brands such as Zipcar, Rover and Kickstarter gaining ever greater attention. All are taking full advantage of the shared economy that these generations tend to prefer.
So, how does this focus on “experience” play out within CRE?
A New Way to Shop
Online shopping is at an all-time high. Retailers have accepted that their stores need to complement, not compete, with their online offering and are places for consumers to experience the brand. Shops like the Dyson store on Oxford Street in London and B8TA in the Hudson Yards mall in New York City are fast becoming concept spaces, where consumers can interact with a product before completing their purchase online when they get home. Experience is key, and besides the look and feel of the shop unit, retailers want to be located in vibrant places that are enjoyable to visit.
A New Way to Work
The pursuit of a better work-life balance, together with seamless connectivity, has meant that flexible working has increased in popularity. With that in mind, the office sector has responded with seismic shifts in traditional interior design concepts by developing coworking hubs which allow businesses to rent smaller spaces in a modern, campus-style environment, with a host of additional business and recreational facilities. Additionally, traditional office occupiers and landlords are responding with a new design that embeds this feel.
We now see that experience is permeating every aspect of the workplace. For many Millennials, there is a clear preference for collaboration areas over desk ownership with the focus being on interaction. The move towards greater social acceptance has led to “inclusive” or “universal” design to help bridge the gap between all ages, abilities and ethnicities to help ensure a higher sense of wellbeing in a diverse workforce. All these factors then need to be seamlessly knitted together with a technology platform that meets their needs for instant connectivity and access. Together, this promotes a collaborative approach to achieving a common goal.
A New Way to Live
The residential rental market is one of the only real estate sectors that Millennials haven’t managed to disrupt yet. However, even here the landscape is changing rapidly and experience is at the forefront. We are seeing more traditional multi-family developers put in communal spaces such as shared kitchens and gardens and are even partnering with local companies to offer events like cooking classes, wine tastings and charity events.
Co-living is fast becoming the disrupter in the residential sector, with different versions of what is essentially an age-old concept popping up all over the globe aimed at young Millennials and Gen Z. By living together in dormitory-style communities, economies of scale give residents access to more, and better quality amenities for a given price point. Shared spaces provide the perfect opportunity for people to come together and build relationships. Although this sector is still comparatively new, it is building global appeal. An example of this is the world's largest co-living home, The Collective, located in Canary Wharf, London, which can accommodate more than 700 residents.
Modern-day attitudes to sharing spaces and technological advancements are enabling more efficient use of property. Landlords and investors need to work with emerging cross-sector trends if they don’t want their buildings to be left empty. Quality, convenience, flexibility and place-making are all key differentiators that should be incorporated into every real estate strategy to be part of the next wave of occupational demand. However, the overall focus needs to be on providing the best and most inclusive experience possible.
Read more about this topic in Cushman & Wakefield’s Report, “Demographic Shifts: The World in 2030”.