Gen Y & Green Apartments
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Gen Y & Green Apartments

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RCLCO presentation delivered at the MPF Southeast Apartment Markets Conference in Atlanta on September 16.

RCLCO presentation delivered at the MPF Southeast Apartment Markets Conference in Atlanta on September 16.

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    Gen Y & Green Apartments Gen Y & Green Apartments Presentation Transcript

    • Generation Y in the Marketplace MPF | September 16, 2009 Jonathan Bartlett, Vice President
    • ABOUT OUR FIRM SERVICES  Corporate Strategic RCLCO is a leading real estate Planning advisory firm providing market  Market & Economic Research intelligence, strategy, and  Project Segmentation, j g Positioning & Pricing implementation solutions to the  Fiscal and Economic industry since 1967 Impact Analysis  Valuation Services  Acquisition & Disposition Strategies  Workouts & Restructuring  Transaction, Structuring & Investment Analysis  Asset Management  Development Services 1 RCLCO 09-11744.000
    • “It’s not the strongest It s that survive, nor the most intelligent, intelligent but the ones most responsive to change.” -Charles Darwin 2 RCLCO 09-11744.000
    • GEN Y HAS THE LARGEST SHARE OF THE U.S. POPULATION, FOLLOWED BY BABY BOOMERS How Many? Gen Y: 80 Million (Boomers: 75 Million) Vast majority renting. What are they doing in the RE y g market? Increasingly buying homes in 2012+ Intown areas, close to I t l t Where do they want to go? work, mixed-use environments SOURCE: RCLCO Consumer Research 3 RCLCO 09-11744.000
    • GENERATION Y: AT A GLANCE AT A GLANCE  Who: Ages 13- 30 in 2009 (born in ’79 through ’96)  Likes: Free content, telecommuting, everything social, the "right fit " wireless right fit,  Dislikes: Anonymous mass-marketing, beaten paths, restricted access  Characteristics: • The most connected generation in our history • Constant flows of information • Highly productive, but place critical importance on balancing work and life • Hi h value placed on staying connected with f i d High l l d t i t d ith friends and family  Hobbies: Googling, social networking, supporting a cause, creating global change  Hangouts: Facebook, Mom and Dad's place, dive bars, all-age shows  Tap that wallet!: $200 billion in annual earning power and growing d i SOURCE: Iconoculture, RCLCO 4 RCLCO 09-11744.000
    • GEN Y IS OUTWARD LOOKING AND CIVIC-MINDED  Gen Y is the most civic-minded generation to date: • 61% of 13- to 25-year olds feel personally responsible for making a difference in the world; • 81% have volunteered in the past year  Gen Y will want these values to extend into the corporate structure of their builder or p developer • 69% consider a company's social and environmental commitment when “These numbers reflect the can-do spirit deciding where to shop; and we have been seeing in this • 83% will t t a company more if it i ill trust is population…(they’re) volunteering at a socially/environmentally responsible level and intensity we haven’t seen since the 1940s” (Howe & Strauss, 2005) SOURCE: USA Weekend, 2005 and Cone, Inc. 2006 5 RCLCO 09-11744.000
    • GEN Y REPRESENTS EARNING POWER OF $200 BILLION ANNUALLY – AND GROWING Generation Y Baby Boom Today’s T d ’ ~80 Million 80 Milli ~75 million 75 illi Population % Today’s 30% 25% Population p % earn above 35% 40% $75,000 Earning ~$200 Billion ~$2 Trillion power  Overall, it is estimated that Generation Y influences as much as half of all spending in f f f the U.S. economy  Gen X earning power, by comparison, represents ~$125 billion SOURCE: Harris Interactive and the U.S. Census 6 RCLCO 09-11744.000
    • GRADUATES ELIGIBLE FOR THE RENTAL MARKET IN 2009; BUYING COULD ACCELERATE IN 2012 WAVE OF GEN Y 4,200,000 4,100,000 4,000,000 4 000 000 3,900,000 3,800,000 3,700,000 3 700 000 Higher purchasing should begin in 3,600,000 2012 3,500,000 3,400,000 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Number of 22-Year Olds 41% of Generation Y plan to rent for at least three years NOTE: Number of 22-year olds is based upon birth rate and does not factor in death rates and migration. SOURCE: U.S. Centers for Disease Control and Prevention; RCLCO Consumer Research 7 RCLCO 09-11744.000
    • RCLCO GEN Y CONSUMER RESEARCH ~80 Million = Gen Y (and ~ 52 million Gen X)  Conducted a national study • Representative of census regions • Received approximately 3,200 survey responses • 50% of those surveyed were Gen Y and 50% were Gen X  Studied Gen Y individuals who were 20-28 years old at the time of the survey  Survey was made up of: • Renters • Owners • Future Shoppers 8 RCLCO 09-11744.000
    • GEN Y WILL BE ATTRACTED TO THE SOUTH AND REMAIN CONSTANT IN THE WEST Most preferred area of the U.S.? The South 1) NYC Top three metro areas preferred nationally? 2) LA 3) Atlanta Area with the least turnover? The West Currently renting; What are they doing in the RE market? increasingly buying homes in 2012 Where do they want to go? Intown areas, close to work, mixed use envs. work mixed-use envs Source: RCLCO consumer research 9 RCLCO 09-11744.000
    • INTEREST IN CLOSE-IN NEIGHBORHOODS IS HIGHEST Location:  Interest in close in neighborhoods is close-in followed by urban locations  Those in the Northeast have the least interest in moving to urban locations and prefer more close-in suburban locations • Most interest in cities is in the South region • Of those moving to cities, most are g , choosing to do it in the South  Much of this is likely due to affordability issues SOURCE: RCLCO Consumer Research 10 RCLCO 09-11744.000
    • GEN Y WILL PAY FOR WALKABLE, MIXED-USE Walkability:  Driven by convenience, connectivity, and a healthy work-life balance to maintain y relationships  1/3 will pay more to walk to shops, work, and entertainment  2/3 say that living in a walkable community is important  More than 1/2 of Gen Y would trade lot size for proximity to shopping or to work  Even among families with children, 1/3 or more are willing to trade lot size and “ideal” homes for walkable, diverse communities  Even in the suburbs the majority of Gen Y prefer characteristics of urban places, particularly walkable environments SOURCE: RCLCO Consumer Research 11 RCLCO 09-11744.000
    • FAMILY CHANGES AND NEEDS  Family Changes: • 70% do not believe they have to move to the suburbs once they have kids • Only half are confident they will need a single-family home once they have kids • Improving schools is the highest community priority for more than half of Gen Y  Needs: • Diversity is key. Gen Y wants diversity in housing types, styles, groups of people, and household composition. • Over half report that having a community and home designed to meet certain "green" objectives plays an important role in their purchase or renting decision. SOURCE: RCLCO Consumer Research 12 RCLCO 09-11744.000
    • LIFESTYLE AND LOCATION IS REQUIRED FOR WORK- LIFE BALANCE Gen Y:  S Sees work-life b l k lif balance or work-life bl d as k lif blend important. They’ll work from home, enroll their kids in their company’s in-house day care, and enjoy “portable” careers  Are multitaskers - they’ll get the job done, and they’ll probably do it in less time, but not at the expense of balance  50% will choose a less-than-ideal home if they can walk to work – allows for shorter commutes and more “me time me time” SOURCE: Franciscan Skemp Health Care and Gundersen Lutheran Medical Center 13 RCLCO 09-11744.000
    • AMENITIES REDEFINED; MORE FOCUS ON WORK/LIFE BALANCE Amenities:  Given the interest in community involvement and work/life balance, the amenities Gen Y values most are in contrast to much of what is being developed today: - Library; y; - Restaurant or café; - Main street village; - Recycling center; and - Fitness center. SOURCE: RCLCO Consumer Research 14 RCLCO 09-11744.000
    • IMPLICATIONS  Intown areas and inner suburbs will remain on an upward trajectory  Diversity, walkablity, and proximity to jobs will be keys to site selection and premiums  Renters will represent a steady stream of demand  Gen Y will shift toward homeownership in 2012  Product types will remain smaller and affordable and should have focus on design over size  The suburbs will need to evolve to remain attractive to Gen Y • More walkable areas, including new and existing town centers • Master-planned communities with greater variety of product types and higher connectivity SOURCE: RCLCO Consumer Research 15 RCLCO 09-11744.000
    • WHAT ABOUT MARKET FOR “GREEN” ? DEMAND BASED ON BENEFITS, NOT FEATURES Green homes are better for “the environment” the environment Green homes save energy (and have lower utility bills) Living in a green home is better for my health and that of my family 16 RCLCO 09-11744.000
    • “GREEN” NOT THE MOST IMPORTANT FACTOR COST, SAFETY, FEATURES, LOCATION DRIVE DECISIONS Rate the Following Factors in Terms of Importance Green/Environmental Features and Amenities Utility Cost Proximity to Public Transportation On-Site Amenities Quality and Reputation of Management Co. Proximity to Shopping/Entertainment Pet Policy Availability of the unit Area's Status Proximity to Work Apartment Features and Design Area's Safety Cost of Rent 0% 10% 20% 30% 40% 50% 60% N=3,212 Least Important Two Three Four Most Important 17 RCLCO 09-11744.000
    • VARYING IMPORTANCE OF “GREEN” BENEFITS “ME GREEN” VS. “WE GREEN” Minim izing the presence of m old and/or m ildew in m y hom e and/or building 12% 68% The quality and cleaniness of the air inside m y hom e and/or building 17% 62% The purity of the w ater in the pipes of m y hom e and/or building 18% 61% Saving m oney on utlility bills 11% 60% Minim izing exposure w ith potentially harm ful m an-m ade substances g p p y 21% 55% Minim izing m y electricity consum ption 20% 51% Conserving energy 24% 47% Ability to w alk m ore and reduce the num ber of trips I need to m ake by autom ible 27% 47% “Me Green” Ability to m aintain/im prove physical/aerobic/cardiovascular fitness 32% 46% Minim izing the use of autom obiles for non-essential or single-rider trips 31% 33% Recycling program s or reuse of recycled m aterials 13% 31% Reducing m y carbon footprint 33% 28% Prom oting cleaner w ater in the outdoor environm ent 18% 26% Avoiding the consum ption of non-renew able energy sources non renew 38% 25% Prom oting cleaner air in the outdoor environm ent 19% 25% Protecting native habitats 18% 25% Minim izing m y consum ption of non-renew able resources 19% 24% Prom oting w ildlife g 19% 24% Slow ing global w arm ing 20% 22% Prom oting cleaner ground and soil in the outdoor environm ent 22% 21% “We Green” Avoiding the consum ption of nuclear energy sources 28% 18% 0% 10% 20% 30% 40% 50% 60% 70% 80% Care about the issue but w ould not influence m y rental decision Care about and m ay influence m y rental decision 18 RCLCO 09-11744.000
    • WILL BUYERS PAY EXTRA FOR “GREEN” FEATURES? YES, IF THERE IS A RETURN ON THEIR INVESTMENT or HEALTH If their investment pays them back over time, If their investment may not pay them back over buyers are willing to spend more money on time, buyers are willing to spend more money their home if…. on their home if…. 80% 75% 80% 70% 70% 60% 60% 50% 50% 46% 50% 41% 40% 40% 30% 30% 24% 20% 18% 20% 10% % 10% 0% 0% If It Saves Energy If It Provides Health Benefits If It’s Good for the Environment 19 RCLCO 09-11744.000
    • “BRANDING” THE GREEN BUILDING ENERGY STAR IS THE BRAND THEY KNOW AND TRUST For those who answered ‘MORE INCLINED TO STAY’ in CQ27, please indicate your willingness to pay a higher rent for one or more of the following certifications: None Specify Other National Audubon Society Built Green Model Green Home Healthy Home or HealthHouse1 y Green Globes EarthCraft Energy St E Star LEED 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Not Willing to Pay any more Rent Willing to Pay more in Rent 20 RCLCO 09-11744.000
    • YOUNGER RENTERS LESS LIKELY TO SPEND THEY MAY EXPECT ECO-RESPONSIBILITY 21 RCLCO 09-11744.000
    • CONTACT US WWW.RCLCO.COM ATLANTA 999 Peachtree Street, Suite 2690 Inquiries: q Atlanta, Atl t GA 30309 (404) 365-9501 Jonathan Bartlett ORLANDO Vice President 100 East Pine Street, Suite 302 jbartlett@rclco.com Orlando, Orlando FL 32801 404-601-0568 (407) 515-6592 AUSTIN Sarah Kirsch 106 E. Sixth St., Suite 900 Senior Principal Austin, Austin TX 78701 (512) 215-3157 skirsch@rclco.com 404-601-0554 WASHINGTON, DC 7200 Wisconsin Avenue, 7th Floor Gregg Logan Bethesda, Bethesda MD 20814 (301) 907-6600 Managing Director glogan@rclco.com LOS ANGELES 407-515-4999 1880Century Park East, Suite 250 Los Angeles CA 90067 Angeles, (310) 914-1800 22 RCLCO 09-11744.000
    • Generation Y in the Marketplace MPF | September 16, 2009 Jonathan Bartlett, Vice President