Millennials are getting older. For commercial real estate, this signals that many in this age cohort are looking to move to the suburbs to live, work and raise families. Millennials, whose peak age group is now 27, are swapping the live-work-play urban centers they were drawn to in their early 20s for the space, better school districts and affordability that suburbs provide, says John Chang, first vice president of research services at brokerage firm Marcus & Millichap. From 2016 to 2021, the firm expects a 0.6 percent increase in 20- to 34-year-olds living in the suburbs, along with a 0.7 percent drop in people of this age group living in downtown areas. Recognizing this trend, some companies are moving to the suburbs, increasing the demand for suburban offices, Chang says. “You’re starting to see the nature of the workplace in the suburbs starting to change and adapt,” he notes/
It still holds true that most millennials—a generation beset by student loan debt—are renting, but many are also seeking homeownership. Sixty-four percent of young people rent—and 65 percent say it’s because of their financial circumstances,—but 60 percent expect to buy a home at some point, according to CBRE’s 2016 global report, Millennials: Myths and Realities. And while 75 percent of millennials work in cities or large towns, 55 percent in the CBRE report said they find small or medium-sized towns “fairly” or “very” appealing, challenging the notion that millennials are only drawn to cities. Another report on millennials from market research company Ipsos found that 50 percent of people in this age group want to own a detached home or apartment in a city, but 36 percent seek to own a detached home in the suburbs.
Given this lifecycle change among millennials, NREI chose to look at the top 10 metro suburban areas that have the best potential for millennial population growth. The following ranking stems from 2016 Marcus & Millichap data that projected five-year millennial population growth rates in the suburbs of U.S. cities.