Millennials Effect on Real Estate: Walk This Way
The days of gas guzzling Hummers, long commutes to and from work and bicycles that never leave the garage are as outdated to Millennials as mullets and snail mail. What today’s young workforce seeks out is products, living quarters and job opportunities that place an emphasis on environmental consciousness. Whether it’s biking to work, walking to the grocery store or close access to public transportation, millennials are all about walkability and this has created a valuable correlation in the residential and commercial real estate market.
Millennials are all about urban cores where ease of mobility without a car ranks very high as a reason for choosing to live somewhere. Reducing energy footprints and being close to everything they need results in people between the ages of 18-31 looking for areas where sustainability and mobility walk hand in hand.
“Cities that want to thrive in our new economic and demographic realities will need to find ways to create and support more of these dynamic, productive walkable districts that are in high demand,” Geoff Anderson, CEO of Smart Growth America told NBC News.
When looking at the difference in housing prices between walkable urban centers and a suburb where driving a car to and from work and various activities is a must, a striking realization emerges.
“Walkable, urban for-sale housing is by far the most expensive housing in the country. The range depends on the market, between 40 percent and 200 percent greater than drivable, suburban housing. “Twenty-five years ago that relationship didn’t exist because walkable was not valued,” George Washington University School of Business Research Professor Chris Leinberger told NBC News.
WalkUPS, aka walkable urban places, occupy only a small portion of the 30 listed most walkable cities—however, these areas have an average of 74 percent price-per-square-foot premium over suburbs when it comes to commercial real estate. When it comes to apartments, there is a 70 percent rental premium on walkability, reports NBC News.
While suburban sprawl was the ideal setting for generations before, Millennials overwhelmingly prefer the eco-benefits and easy access provided by tightly knit WalkUPS. A building’s WalkScore is now just as important as the amenities it offers to these young, college-educated adults.
Cities known for their surrounding suburbs are taking note of this change. Research by George Washington University and advocacy group Smart Growth America notes that Phoenix, Miami, Detroit and Denver will soon be in the top ten of most walkable cities alongside old standbys like Washington D.C., New York City and Chicago reports Time Magazine.
An area’s walkability is also conducive to its real estate recovery. Walkable neighborhoods have seen home prices spike faster than in the once favored suburbs thanks to close access to retail, restaurants and workplaces. A recent study commissioned by CEOs for Cities found that looked at 94,000 real estate transactions in 15 markets found that a one-point increase in WalkScore is linked to an increase in home value between $500 and $3,000 according to Real Estate MSN.
With WalkUPS becoming the destinations of choice for Millennials and a city’s walkability rating positively effecting its real estate value, expect to see more cities and even burbs clamoring to cater to this young, educated workforce that desires work, play and home to be closely tied together. The days of sprawl are gone. Millennials have made their choice—proximity is king.