The world of commercial office space is changing. The question is not only how it’s changing but where? In the 1940’s and 50’s the returning GI’s left the cities to buy their dream homes in the suburbs. The developers were more than happy to accommodate and thus began the suburban sprawl. Office buildings were built to accommodate companies that wanted offices near their owners, employees, and customers. For over 50 years, this cycle repeated itself throughout the country and suburban office markets boomed.
This changed in the first decade of the new millennium. The millennials, raised on digital social connectivity, wanted social connections in real life and a lifestyle incorporating working, living, and playing in the same proximity. They moved to major cities that could accommodate their lifestyle: NYC, Boston, Los Angeles, San Francisco, Chicago and smaller cities: Denver, Salt Lake City, Nashville, Austin, Portland, and Phoenix. Technology and other industries followed, driven by their need for millennial talent. As a result, the millennial population and businesses grew exponentially in the cities while declining dramatically in the suburbs.
The question is how long will this new paradigm last? It has been predicted that once the millennials reach forty years old they will start families, want houses, and move to the suburbs. Since the millennials are defined as the demographic born between 1980 and 2000, the first 40-year-old millennials won’t reach us until 2020. Whether or not this will happen remains to be seen. All we can do is wait, time will tell.
Debra Stevens is the Principal of The Stevens Group a commercial real estate advisory firm specializing in exclusively representing corporate clients in the leasing, acquisition and disposition of commercial real estate. The Stevens Group is the Boston affiliate of ITRA Global, an organization of real estate professionals specializing in representing tenants, buyers and entrepreneurial startups in the leasing, acquisition and disposition of office, industrial and retail facilities. With coverage in major markets around the world, ITRA Global is one of the largest organizations dedicated to representing tenants and occupiers of commercial real estate.