During the coming decade, demographic changes, as well as changes in consumer desires and behavior, will have a tremendous effect on real estate markets and on how our communities function and grow. As the baby boomers begin to reach retirement age, they are being replaced as the market bellwether by Generation Y, which represents today’s 20-somethings and teenagers. This group is larger than the baby boomer generation and exhibits different tastes and attitudes about where and how they want to live. Researchers and savvy real estate professionals are aware of the different interests of this group, and corporate America is noticing too. An article in the May issue of the Harvard Business Review characterizes the increasing number of businesses that are changing their focus to urban areas as “getting a jump on a major cultural and demographic shift away from suburban sprawl.”
Travel behavior is changing remarkably, as evidenced by the federal government’s tracking of total vehicle miles traveled, which has been declining since 2006. Transit ridership has increased at a great pace, achieving a 52-year ridership high in 2008.
Car sharing is increasing in popularity, giving more people the freedom to not own a car. Cities are making low-budget investments to promote bicycle ridership, with many communities setting goals to increase the share of trips taken by bicycle.
Environmental factors will play a huge role in the next decade. More energy-efﬁcient and green buildings will become standard, as costs and beneﬁts will become better understood, and lenders will increasingly recognize the greater value of green buildings. Water shortages will threaten urban expansion in many parts of the country, resulting in developers being required to identify new water sources while producing developments that use much less water.
Building communities for a new generation of consumers will require many parties, including developers, lenders and government regulators, to adopt new ways of doing business. And to keep pace with our needs, more money will need to be invested in public transportation and water infrastructure. These megatrends will affect us all in the new decade.