Gen Y forces developers to adapt
The housing preferences of Generation Y and the broader public’s desire for intown living are prompting developers to adapt their plans for new projects.
In the past year, several new developments and redevelopments have kicked off in walkable intown neighborhoods – and they all have a for-rent component. They include Ponce City Market, SkyHouse in Midtown and Emory Point, which is rising adjacent to Emory University. Emory Point, the mixed-use project developed by a partnership of Cousins Properties Inc. and Gables Residential and master planned by Cooper Carry, originally called for a mix of condominiums and apartments. Interestingly, Gen Y’s desire to rent instead of own prompted the team to switch gears and develop all 443 multifamily units as apartments.
Specifically, here are three trends that we believe are fueling this shift in demand:
• Apartments are hot. In the wake of the housing crisis, people no longer see home ownership as the American Dream or a ticket to wealth creation. Apartment dwellers include people who have been burned by the housing market, and people who know someone who has been. Furthermore, Generation Y — the more than 70 million young people born between 1980 and 2000 — is entering the workforce and loves the flexibility offered by renting instead of owning.
• Mixed-use has staying power. That’s because people are tired of commuting and spending their lives inside cars. They crave walkable environments in urban infill settings. Also, zoning requirements across the country are increasingly demanding a mix of uses. The first phase at Emory Point also has 80,000 square feet of retail and Phase Two calls for an additional 40,000 square feet of retail. It should be noted that some planned mixed-use projects in other markets have dropped the retail component because it’s too difficult to lease. Retail is just not bouncing back as quickly as multifamily. But near Emory, there is pent-up demand for retail and restaurant space.
• Unit sizes are shrinking. Originally, the project’s residential units were designed with an average size of 950 square feet. The actual project has a slightly smaller average size of about 930 square feet. If we were designing the project today, the average unit would likely be 850 square feet. The smaller unit size allows the owner to demand a higher rate per square foot without driving up the monthly rent payment for the renter. As for living in a small space? Gen Y seems willing to accept less. Today’s apartment dweller is focused not on size but on amenities, nearby restaurants, and being out and about in a walkable environment.
We expect this trend to continue as Generation Y wants to live close in, rent instead of own and walk to dinner and places to hang out.