1. Generation Y in the Marketplace
MPF | September 16, 2009
Jonathan Bartlett, Vice President
2. ABOUT OUR FIRM
SERVICES
Corporate Strategic
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Market & Economic
Research intelligence, strategy, and
Project Segmentation,
j g
Positioning & Pricing
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Investment Analysis
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3. “It’s not the strongest
It s
that survive, nor the most
intelligent,
intelligent but the ones
most responsive to
change.”
-Charles Darwin
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4. GEN Y HAS THE LARGEST SHARE OF THE U.S.
POPULATION, FOLLOWED BY BABY BOOMERS
How Many?
Gen Y: 80 Million
(Boomers: 75 Million)
Vast majority renting.
What are they doing in the RE
y g
market? Increasingly buying
homes in 2012+
Intown areas, close to
I t l t
Where do they want to go? work, mixed-use
environments
SOURCE: RCLCO Consumer Research
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5. GENERATION 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 " wireless
right fit,
Dislikes: Anonymous mass-marketing, beaten paths,
restricted access
Characteristics:
• The most connected generation in our history
• Constant flows of information
• Highly productive, but place critical importance on
balancing work and life
• Hi h value placed on staying connected with f i d
High l l d t i t d ith 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
and growing
d i
SOURCE: Iconoculture, RCLCO
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6. GEN Y IS OUTWARD LOOKING AND CIVIC-MINDED
Gen Y is the most civic-minded generation
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
p
developer
• 69% consider a company's social and
environmental commitment when
“These numbers reflect the can-do spirit deciding where to shop; and
we have been seeing in this • 83% will t t a company more if it i
ill trust is
population…(they’re) volunteering at a socially/environmentally responsible
level and intensity we haven’t seen since
the 1940s” (Howe & Strauss, 2005)
SOURCE: USA Weekend, 2005 and Cone, Inc. 2006
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7. GEN Y REPRESENTS EARNING POWER OF $200
BILLION ANNUALLY – AND GROWING
Generation Y Baby Boom
Today’s
T d ’ ~80 Million
80 Milli ~75 million
75 illi
Population
% Today’s 30% 25%
Population
p
% earn above 35% 40%
$75,000
Earning ~$200 Billion ~$2 Trillion
power
Overall, it is estimated that Generation Y
influences as much as half of all spending in
f f f
the U.S. economy
Gen X earning power, by comparison,
represents ~$125 billion
SOURCE: Harris Interactive and the U.S. Census
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8. GRADUATES ELIGIBLE FOR THE RENTAL MARKET IN
2009; BUYING COULD ACCELERATE IN 2012
WAVE OF GEN Y
4,200,000
4,100,000
4,000,000
4 000 000
3,900,000
3,800,000
3,700,000
3 700 000 Higher purchasing
should begin in
3,600,000 2012
3,500,000
3,400,000
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Number of 22-Year Olds
41% of Generation Y plan to rent for at least three
years
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
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9. RCLCO GEN Y CONSUMER RESEARCH
~80 Million = Gen Y (and ~ 52 million Gen X)
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 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
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10. GEN Y WILL BE ATTRACTED TO THE SOUTH AND
REMAIN CONSTANT IN THE WEST
Most preferred area of the U.S.? The South
1) NYC
Top three metro areas preferred
nationally? 2) LA
3) Atlanta
Area with the least turnover? The West
Currently renting;
What are they doing in the RE
market? increasingly buying
homes in 2012
Where do they want to go?
Intown areas, close to
work, mixed use envs.
work mixed-use envs
Source: RCLCO consumer research
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11. INTEREST IN CLOSE-IN NEIGHBORHOODS IS
HIGHEST
Location:
Interest in close in neighborhoods is
close-in
followed by urban locations
Those in the Northeast have the least
interest in moving to urban locations and
prefer 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
SOURCE: RCLCO Consumer Research
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12. GEN Y WILL PAY FOR WALKABLE, MIXED-USE
Walkability:
Driven by convenience, connectivity, and a
healthy work-life balance to maintain
y
relationships
1/3 will pay more to walk to shops, work,
and entertainment
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
prefer characteristics of urban places,
particularly walkable environments
SOURCE: RCLCO Consumer Research
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13. FAMILY CHANGES AND NEEDS
Family Changes:
• 70% 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:
• 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.
SOURCE: RCLCO Consumer Research
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14. LIFESTYLE AND LOCATION IS REQUIRED FOR WORK-
LIFE BALANCE
Gen Y:
S
Sees work-life b l
k lif balance or work-life bl d as
k lif blend
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
me time”
SOURCE: Franciscan Skemp Health Care and Gundersen Lutheran Medical Center
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15. 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; and
- Fitness center.
SOURCE: RCLCO Consumer Research
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16. IMPLICATIONS
Intown areas and inner suburbs will remain on an
upward 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 centers
• Master-planned communities with greater
variety of product types and higher connectivity
SOURCE: RCLCO Consumer Research
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17. WHAT ABOUT MARKET FOR “GREEN” ?
DEMAND BASED ON BENEFITS, NOT FEATURES
Green homes are better
for “the environment”
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
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18. “GREEN” NOT THE MOST IMPORTANT FACTOR
COST, SAFETY, FEATURES, LOCATION DRIVE DECISIONS
Rate the Following Factors in Terms of Importance
Green/Environmental Features and Amenities
Utility Cost
Proximity to Public Transportation
On-Site Amenities
Quality and Reputation of Management Co.
Proximity to Shopping/Entertainment
Pet Policy
Availability of the unit
Area's Status
Proximity to Work
Apartment Features and Design
Area's Safety
Cost of Rent
0% 10% 20% 30% 40% 50% 60%
N=3,212 Least Important Two Three Four Most Important
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19. VARYING IMPORTANCE OF “GREEN” BENEFITS
“ME GREEN” VS. “WE GREEN”
Minim izing the presence of m old and/or m ildew in m y hom e and/or building 12%
68%
The quality and cleaniness of the air inside m y hom e and/or building 17%
62%
The purity of the w ater in the pipes of m y hom e and/or building 18%
61%
Saving m oney on utlility bills 11%
60%
Minim izing exposure w ith potentially harm ful m an-m ade substances
g p p y 21%
55%
Minim izing m y electricity consum ption 20%
51%
Conserving energy 24%
47%
Ability to w alk m ore and reduce the num ber of trips I need to m ake by autom ible 27%
47% “Me Green”
Ability to m aintain/im prove physical/aerobic/cardiovascular fitness 32%
46%
Minim izing the use of autom obiles for non-essential or single-rider trips 31%
33%
Recycling program s or reuse of recycled m aterials 13%
31%
Reducing m y carbon footprint 33%
28%
Prom oting cleaner w ater in the outdoor environm ent 18%
26%
Avoiding the consum ption of non-renew able energy sources
non renew 38%
25%
Prom oting cleaner air in the outdoor environm ent 19%
25%
Protecting native habitats 18%
25%
Minim izing m y consum ption of non-renew able resources 19%
24%
Prom oting w ildlife
g 19%
24%
Slow ing global w arm ing 20%
22%
Prom oting cleaner ground and soil in the outdoor environm ent 22%
21% “We Green”
Avoiding the consum ption of nuclear energy sources 28%
18%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Care about the issue but w ould not influence m y rental decision Care about and m ay influence m y rental decision
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20. 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, If their investment may not pay them back over
buyers are willing to spend more money on time, buyers are willing to spend more money
their home if…. on their home if….
80% 75% 80%
70% 70%
60% 60%
50%
50% 46% 50%
41%
40% 40%
30% 30% 24%
20% 18%
20%
10% %
10%
0% 0%
If It Saves Energy If It Provides Health Benefits If It’s Good for the Environment
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21. “BRANDING” THE GREEN BUILDING
ENERGY 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
Specify
Other
National Audubon Society
Built Green
Model Green Home
Healthy Home or HealthHouse1
y
Green Globes
EarthCraft
Energy St
E Star
LEED
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Not Willing to Pay any more Rent Willing to Pay more in Rent
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22. YOUNGER RENTERS LESS LIKELY TO SPEND
THEY MAY EXPECT ECO-RESPONSIBILITY
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23. CONTACT US
WWW.RCLCO.COM
ATLANTA
999 Peachtree Street, Suite 2690 Inquiries:
q
Atlanta,
Atl t GA 30309
(404) 365-9501
Jonathan Bartlett
ORLANDO Vice President
100 East Pine Street, Suite 302 jbartlett@rclco.com
Orlando,
Orlando FL 32801 404-601-0568
(407) 515-6592
AUSTIN Sarah Kirsch
106 E. Sixth St., Suite 900 Senior Principal
Austin,
Austin TX 78701
(512) 215-3157
skirsch@rclco.com
404-601-0554
WASHINGTON, DC
7200 Wisconsin Avenue, 7th Floor Gregg Logan
Bethesda,
Bethesda MD 20814
(301) 907-6600 Managing Director
glogan@rclco.com
LOS ANGELES 407-515-4999
1880Century Park East, Suite 250
Los Angeles CA 90067
Angeles,
(310) 914-1800
22 RCLCO 09-11744.000
24. Generation Y in the Marketplace
MPF | September 16, 2009
Jonathan Bartlett, Vice President
