gen y & green apartments
DESCRIPTION
RCLCO presentation delivered at the MPF Southeast Apartment Markets Conference in Atlanta on September 16.TRANSCRIPT
Generation Y in the Marketplace
MPF | September 16, 2009
Jonathan Bartlett, Vice President
ABOUT OUR FIRM
RCLCO is a leading real estate advisory firm providing market
SERVICES
Corporate Strategic Planning advisory firm providing market
intelligence, strategy, and implementation solutions to the
Planning
Market & Economic Research
Project Segmentation, implementation solutions to the industry since 1967
j gPositioning & Pricing
Fiscal and Economic Impact Analysis
Valuation ServicesValuation ServicesAcquisition & Disposition
Strategies
Workouts & Restructuring
Transaction, Structuring & Investment Analysis
Asset Management
Development Services
RCLCO 09-11744.00011
Development Services
“It’s not the strongestIt s not the strongest that survive, nor the most intelligent but the onesintelligent, but the ones most responsive to change.”
-Charles Darwin
RCLCO 09-11744.0002
GEN Y HAS THE LARGEST SHARE OF THE U.S. POPULATION, FOLLOWED BY BABY BOOMERS
How Many? Gen Y: 80 Million(Boomers: 75 Million)(Boomers: 75 Million)
What are they doing in the RE Vast majority renting. Increasingly buyingy g
market? Increasingly buying homes in 2012+
I t l tWhere do they want to go?
Intown areas, close to work, mixed-use
environments
RCLCO 09-11744.0003
SOURCE: RCLCO Consumer Research
AT A GLANCEGENERATION 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 " wirelessthe right fit, wireless
Dislikes: Anonymous mass-marketing, beaten paths, restricted access
Characteristics: Characteristics: • The most connected generation in our history• Constant flows of information• Highly productive, but place critical importance on
balancing work and lifeHi h l l d t i t d ith f i d• High value placed on staying connected with 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 d i
RCLCO 09-11744.0004
and growingSOURCE: Iconoculture, RCLCO
GEN Y IS OUTWARD LOOKING AND CIVIC-MINDED
Gen Y is the most civic-minded generation to date: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 developerp
• 69% consider a company's social and environmental commitment when deciding where to shop; and
83% ill t t if it i“These numbers reflect the can-do spirit
we have been seeing in this • 83% will trust a company more if it is socially/environmentally responsible
we have been seeing in this population…(they’re) volunteering at a
level and intensity we haven’t seen since the 1940s” (Howe & Strauss, 2005)
RCLCO 09-11744.0005
SOURCE: USA Weekend, 2005 and Cone, Inc. 2006
GEN Y REPRESENTS EARNING POWER OF $200 BILLION ANNUALLY – AND GROWING
Generation Y Baby BoomT d ’ 80 Milli 75 illiToday’s Population
~80 Million ~75 million
% Today’s Population
30% 25%p
% earn above $75,000
35% 40%
Earning ~$200 Billion ~$2 Trillion
Overall, it is estimated that Generation Y f f f
power
influences as much as half of all spending in the U.S. economy
Gen X earning power, by comparison, represents ~$125 billion
RCLCO 09-11744.0006
represents ~$125 billionSOURCE: Harris Interactive and the U.S. Census
GRADUATES ELIGIBLE FOR THE RENTAL MARKET IN 2009; BUYING COULD ACCELERATE IN 2012
4 000 000
4,100,000
4,200,000WAVE OF GEN Y
3 700 000
3,800,000
3,900,000
4,000,000
Higher purchasing
3,500,000
3,600,000
3,700,000 Higher purchasing should begin in
2012
3,400,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Number of 22-Year Olds
41% of Generation Y plan to rent for at least three years
RCLCO 09-11744.0007
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
RCLCO GEN Y CONSUMER RESEARCH
~80 Million = Gen Y (and ~ 52 million Gen X) Conducted a national study 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 XGen 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
RCLCO 09-11744.0008
GEN Y WILL BE ATTRACTED TO THE SOUTH AND REMAIN CONSTANT IN THE WEST
Most preferred area of the U.S.? The South
Top three metro areas preferred nationally?
1) NYC2) LA3) Atlanta
What are they doing in the RE Currently renting;
increasingly buying
Area with the least turnover? The West
market? increasingly buying homes in 2012
Where do they want to go? Intown areas, close to work mixed use envswork, mixed-use envs.
RCLCO 09-11744.0009
Source: RCLCO consumer research
INTEREST IN CLOSE-IN NEIGHBORHOODS IS HIGHEST
Location: Interest in close-in neighborhoods is Interest in close in neighborhoods is
followed by urban locations
Those in the Northeast have the least interest in moving to urban locations and prefer more close-in suburban locationsprefer 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
RCLCO 09-11744.00010
SOURCE: RCLCO Consumer Research
GEN Y WILL PAY FOR WALKABLE, MIXED-USE
Walkability: Driven by convenience, connectivity, and a
healthy work-life balance to maintain yrelationships
1/3 will pay more to walk to shops, work, and entertainment
2/3 say that living in a walkable community 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 Even in the suburbs the majority of Gen Y prefer characteristics of urban places, particularly walkable environments
RCLCO 09-11744.00011
SOURCE: RCLCO Consumer Research
FAMILY CHANGES AND NEEDS
Family Changes:• 70% do not believe they have to move to the suburbs70% 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: 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.
RCLCO 09-11744.00012
SOURCE: RCLCO Consumer Research
LIFESTYLE AND LOCATION IS REQUIRED FOR WORK-LIFE BALANCE
Gen Y:S k lif b l k lif bl d Sees work-life balance or work-life blend as 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”commutes and more me time
RCLCO 09-11744.00013
SOURCE: Franciscan Skemp Health Care and Gundersen Lutheran Medical Center
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; andRecycling center; and
- Fitness center.
RCLCO 09-11744.00014
SOURCE: RCLCO Consumer Research
IMPLICATIONS
Intown areas and inner suburbs will remain on an upward trajectoryupward 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 centersexisting town centers
• Master-planned communities with greater variety of product types and higher connectivity
RCLCO 09-11744.00015
SOURCE: RCLCO Consumer Research
WHAT ABOUT MARKET FOR “GREEN” ?DEMAND BASED ON BENEFITS, NOT FEATURES
Green homes are betterfor “the environment”for 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
RCLCO 09-11744.00016
“GREEN” NOT THE MOST IMPORTANT FACTORCOST, SAFETY, FEATURES, LOCATION DRIVE DECISIONS
Rate the Following Factors in Terms of Importance
Utility Cost
Green/Environmental Features and Amenities
Quality and Reputation of Management Co.
On-Site Amenities
Proximity to Public Transportation
Availability of the unit
Pet Policy
Proximity to Shopping/Entertainment
Apartment Features and Design
Proximity to Work
Area's Status
0% 10% 20% 30% 40% 50% 60%
Cost of Rent
Area's Safety
RCLCO 09-11744.0001717
N=3,212 Least Important Two Three Four Most Important
12% 68%Minimizing the presence of mold and/or mildew in my home and/or building
VARYING IMPORTANCE OF “GREEN” BENEFITS“ME GREEN” VS. “WE GREEN”
12%
17%
18%
11%
21%
68%
62%
61%
60%
55%
Minimizing the presence of mold and/or mildew in my home and/or building
The quality and cleaniness of the air inside my home and/or building
The purity of the water in the pipes of my home and/or building
Saving money on utlility bills
Minimizing exposure with potentially harmful man-made substances20%
24%
27%
32%
55%
51%
47%
47%
46%
g p p y
Minimizing my electricity consumption
Conserving energy
Ability to walk more and reduce the number of trips I need to make by automible
Ability to maintain/improve physical/aerobic/cardiovascular fitness“Me Green”
31%
13%
33%
18%
38%
33%
31%
28%
26%
Minimizing the use of automobiles for non-essential or single-rider trips
Recycling programs or reuse of recycled materials
Reducing my carbon footprint
Promoting cleaner water in the outdoor environment
Avoiding the consumption of non renewable energy sources 38%
19%
18%
19%
19%
25%
25%
25%
24%
24%
Avoiding the consumption of non-renewable energy sources
Promoting cleaner air in the outdoor environment
Protecting native habitats
Minimizing my consumption of non-renewable resources
Promoting w ildlife20%
22%
28%
24%
22%
21%
18%
0% 10% 20% 30% 40% 50% 60% 70% 80%
g
Slowing global warming
Promoting cleaner ground and soil in the outdoor environment
Avoiding the consumption of nuclear energy sources
“We Green”
RCLCO 09-11744.000
Care about the issue but would not influence my rental decision Care about and may influence my rental decision
18
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, buyers are willing to spend more money on
their home if….
If their investment may not pay them back over time, buyers are willing to spend more money
on their home if….
75%
60%
70%
80%
60%
70%
80%
50%46%
40%
50%
60%
41%40%
50%
60%
20%
30%
18%24%
%
20%
30%
0%
10%
0%
10%
RCLCO 09-11744.00019
If It Saves Energy If It Provides Health Benefits If It’s Good for the Environment
“BRANDING” THE GREEN BUILDINGENERGY 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
National Audubon Society
Other
Specify
Healthy Home or HealthHouse1
Model Green Home
Built Green
E St
EarthCraft
Green Globes
y
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
LEED
Energy Star
RCLCO 09-11744.0002020
Not Willing to Pay any more Rent Willing to Pay more in Rent
YOUNGER RENTERS LESS LIKELY TO SPENDTHEY MAY EXPECT ECO-RESPONSIBILITY
RCLCO 09-11744.0002121
CONTACT US
ATLANTA999 Peachtree Street, Suite 2690Atl t GA 30309
Inquiries:
WWW.RCLCO.COM
Atlanta, GA 30309(404) 365-9501
ORLANDO100 East Pine Street, Suite 302Orlando FL 32801
q
Jonathan BartlettVice [email protected]
Orlando, FL 32801(407) 515-6592
AUSTIN106 E. Sixth St., Suite 900Austin TX 78701
404-601-0568
Sarah KirschSenior Principal
Austin, TX 78701(512) 215-3157
WASHINGTON, DC7200 Wisconsin Avenue, 7th FloorBethesda MD 20814
Gregg LoganBethesda, MD 20814(301) 907-6600
LOS ANGELES1880Century Park East, Suite 250Los Angeles CA 90067
Managing [email protected]
RCLCO 09-11744.0002222
Los Angeles, CA 90067(310) 914-1800
Generation Y in the Marketplace
MPF | September 16, 2009
Jonathan Bartlett, Vice President