by Dan Rafter
Dave Hendrickson knows Millennials. The managing director in the Chicago office of Jones Lang LaSalle has four Millennial children of his own. And Hendrickson knows that the way they shop and work is different from the way his own generation did these same things.
“They are an interesting age group,” Hendrickson said. “They’ve had some really hard bumps in the road. They’ve seen the economy struggle. That makes them more conservative when it comes to spending and parting with their cash.”
Hendrickson isn’t the only official with Jones Lang LaSalle who’s taken a long look at the habits of Millennials and how they impact the commercial real estate world. This topic accounted for a large chunk of Jones Lang LaSalle’s U.S. Cross Sector Outlook, a report that the company presented at the Urban Land Institute’s fall conference held earlier this month in Chicago.
Jone Lang LaSalle’s report said that Millennials love change. And that has had a broad impact across several types of commercial property.
For instance, Millennials have embraced new technology, social media and collaboration in the office. This has helped create what Jones Lang LaSalle calls a “sharing” economy in the United States.
This has changed the way stores market to their consumers, how companies design and configure their work spaces and how hotels and multi-family properties are developed. Its forced retailers to offer robust online shopping options.
According to Jones Lang LaSalle’s repot, Millennials — who are generally between the age of 18 to 34 — total about 80 million U.S. residents and spend about $600 billion each year. By 2020, these consumers are expected to be responsible for as much as $1.4 trillion in spending every year, a figure that will represent about 30 percent of total retail sales.
It’s clear, then, why retailers are so interested in meeting the needs of Millennials.
And one way retailers can nab the attention of Millennials? They can offer them bargains. Jones Lang LaSalle reports that Millennials are extremely price sensitive. These consumers rely on mobile devices to comparison shop while inside stores. They prefer dollar stores, second-hand stores and drug stores to more expensive retailers. Jones Lang LaSalle says that Millennials favor coupons, too, with 68 percent saying that coupons influence their purchase decisions.
The Cross Sector report states that Millennials love gadgets, too, and are fond of in-store kiosks. Millennials report that they are 77 percent more likely to be influenced by in-store kiosks when making buying decisions than is the average shopper.
And because Millennials love change, expect to see more retailers unveil pop-up shops. These shops appear in spaces for a short time — often based on the season — and then disappear after a month or so. Think all those Halloween shops that start opening in vacant retail locations in late September and then disappear by early November.
Millennials are having an impact on the office, too, with Jones Lang LaSalle reporting that these young adults view the office as place for people to gather, share and collaborate, not a place for individual tasks. This means that offices should become more open places, with fewer employees spending their entire workdays sitting at the same desk in the same cubicle.
“Millennials want more collaborative spaces,” Hendrickson said. “They don’t just want a sea of cubicles. They want to space to hang together, to be creative in and think. They don’t want closed-in rooms.”
Then there’s the fact that today’s younger workers know that they can work from anywhere thanks to improving technology. This will change the way businesses handle their expansion plans. Hendrickson says that companies will continue to grow and need new space. But when they move into new locations, they might actually downsize their space as more of their workers spend more of their time working from home or remote locations.
“The ability to be connected all the time is changing how office buildings work,” Hendrickson said. “That might put a little bit of a lid on the expansion of offices in Chicago. That’s the downside. But on the upside, because of the recession there has not been a lot of new office building in the Chicago area. There is now a lot of job growth in Chicago, too. A lot of companies are altering their spaces and becoming more efficient. But you can only be so efficient. Eventually, you have to add space if you’re going to continue to grow.”