The Millennial Shift in Commercial Real Estate
As the Baby Boomers are defined by a war, the Millennials are defined by an invention. The U.S. Council of Economic Advisors summarized this generation’s technological shift aptly, “The significance of Millennials extends beyond their numbers. This is the first generation to have had access to the Internet during their formative years.”
The de facto study on Millennial demographics is conducted by Pew Research Center. They state, “The Millennial generation is forging a distinctive path into adulthood.” Like most industries, the day to day professional life of the commercial real estate professional must adapt to the increase of millennials in the industry. In defining millennials Pew continues, “Now ranging in age from 18 to 33, they are relatively unattached to organized politics and religion, linked by social media, burdened by debt, distrustful of people, in no rush to marry — and optimistic about the future.”
The innovations associated with the millennial generation (smartphones, internet, social media) are undoubtedly a part of the real estate agent’s day to day. For their businesses, 93% of real estate brokers use a smartphone and 91% use social media according to the realtor.org technology survey.
Kathryn KJ Juneau, a millennial CRE broker in Baton Rouge, encapsulates a generation’s distaste for an over-reliance on phone calls: “It’s the 21st century and you’re telling me I need to call you for information on a property? What about texting? With our shorthand and abbreviations, we are quick and get right to the point. Why have a five minute phone call when we can text for less than 30 seconds?” (via SVNGLL).
Millennials expect the access to professional information to more closely resemble consumer facing research. Throughout the consideration and buying process, consumers have abundant access to reviews, ratings, and event direct lines to vetted sources.
“Millennials will also be pushing easier ways for seemingly small tasks,” reports the National Real Estate Investor. “For example, a text-to-confirm standard for initial property vetting — meaning Millennial agents will confirm smaller listing questions by simply shooting a text to the listing broker.”
Commercial real estate firms recognize the real business in keeping up with technology, social media and the behaviors of their buyer; the tech savvy millennial workforce is well positioned to thrive in the commercial real estate industry.
68% of first time home buyers are currently millennials, according to the National Association of Realtors.Millennials, as buyers and sellers, have traits that differ previous generations. Ironically as the first generation with social media, they have low levels of social trust. Pew estimates 19% of Millennial respondents say ‘they trust other people,’ compared to 31% of Gen-Xers and 40% of Baby Boomers.
What does this mean for the future profile of the commercial real estate professional?
“With millennials the advantage of the ‘rolodex effect’ is less tied to years of experience,” said Capstak President & Co-Founder Heather Goldman. “Today the Internet and new technology tools enable millennials to build online networks and more efficiently access information about listings, lending and investment opportunities and buyers. They are experiencing rapid career growth with new ways to broker deals and relationships.”
This mirrors the millennial generation’s buying behaviours. “Millennials who are first generation investors that don’t know who to trust will immediately turn to the internet as their first source,” reports The Nation Real Estate Investor. “A platform for online comparison of brokers would be their best friend. I imagine this platform would be like the Yelp for brokers — including reviews, specialties, locations served, price ranges, contact information, etc.”
This doesn’t mean the commercial real estate industry does not still demand the human touch. “Interpersonal communication is important, as are hand written cards on occasion,” says Juneau. “But my overall goal is to get my clients the information they want more quickly. We all know “time can kill a deal,” that’s real life. So, let’s all get aboard the information highway in CRE and zoom along like the rest of the world.”
It’s hard to talk about millennials without examining the role of a greater purpose in their economic activities.When realtor.org asked about the primary reason for purchasing a home, the “desire to own a home of their own was highest among millennials at 39 percent… Millennials were the most likely to use a real estate agent, mobile or tablet applications, and mobile or tablet search engines during their search.”
To re-iterate: the top factor driving a millennial to own residential real estate is their desire to own a home. It’s very tied to their personal purpose, i.e. I will here, I own here. The Washington Post went so far as to unearth Pew Research data indicating that owning a home was more important to millennial buyers than ‘having a high paying career,’ ‘living a very religious life’ or ‘becoming famous.’ While Time’s infamous “Me, Me, Generation” coining may remain at the top of our newsfeed, the millennial’s desire to own a home remains high. Commercial real estate sellers will have to cater to rising demographic of millennial buyers, where we’ve seen the first wave in the residential space.
Technology’s role in the ‘who-knows-who?’ and ‘who-knows-what?’ of commercial real estate cannot be separated from the millennial’s increased role in the commercial real estate industry. Commercial real estate firms are now faced with adapting to the millennial buyer and the millennial colleague.
Originally Published on the Capstak Commercial Real Estate Blog .Photo Credit REALTORS® & PEW Research Center.
Capstak is the commercial real estate community.
David Smooke is partner in the tech marketing firm, ArtMap Inc., and the creator of ART + marketing.