The direct spending power of the nation’s roughly 80 million millennials is expected to reach $200 billion next year, according to a widely cited report from advertising agency Barkley. And retail developers are seizing the opportunity to try to draw millennials into urban mixed-use projects.
Yet the Great Recession, student debt and the steep cost of housing in cities with high numbers of millennials mean less pocket money. Gen Y types and those younger spend what is left over carefully, using the technology they grew up with to sniff out deals through comparison shopping, online reviews and social-media shares, said Tom McGee, the CEO of the International Council of Shopping Centers. “This is a generation that’s become accustomed to immediate access and feedback,” he said, adding that despite having grown up around so much technology, millennials “put just as much of a premium on shopping in a physical environment as the baby boomers do.”
Jeff Rinkov, CEO of the commercial brokerage Lee & Associates, said, “The biggest challenge is how to integrate technology and how to have an open format, so as technology evolves and retailers adapt and adopt more technology, how do you get that to service the customers?” Rinkov said retailers and shopping mall and boutique developers “are thinking about one thing: How can I connect with my millennial consumers’ mobile?”
Here’s a look at three cities where developers are working hard to target the younger crowd with services-heavy retail presences in mixed-use developments.
Greater Boston
When the Somerville, Massachusetts, mixed-use retail-and-housing development known as Assembly Row first got underway in late 2011, Joseph Curtatone, the city’s mayor, called it “the best brand-new neighborhood on the Eastern Seaboard.”
Developer Federal Realty Investment Trust of Maryland plunked down 2,100 apartments and condos, 1.75 million square feet of office space and more than 500,000
The spending power of millennials is expected to reach $200 billion next year.
square feet of space devoted to retail, including dozens of smaller outlet stores, on the 45-acre site of a long-shuttered Ford factory. For two years now, parts of Assembly Row, including its housing, have been opening, drawing “savvy, value-conscious and discerning consumers,” according to Federal Realty. Branches of J. Crew and Lucky Brand stores are in the mix along with a Legal on the Mystic, a new bar-like hip offering from the Legal Seafood chain.
The median age of residents living within a mile of Assembly Row is 35 and within 5 miles, 33, according to Federal Realty. The site is just 2.5 miles from downtown Boston (a city that claims at least 1 in 3 residents are 20 to 34) and right by a new subway stop.
Columbus
After officials in the Ohio capital launched a campaign in 2014 to draw what they called “young transitionals” from other locales, signboards in Chicago and Washington, D.C., touted Columbus’ positives. The Life in Cbus website posted “7 Reasons Columbus Is America’s Next Hot City (Really!).” One answer: “The craft liquor and beer scene is taking off.”
Developments such as 250 High Street and Highpoint on Columbus Commons, both in central Columbus, are trying to capitalize on the city’s efforts. Highpoint, which opened in 2015, is slated to have 23,000 square feet of smaller-store retailers beneath more than 300 apartments and townhomes. Most of the retail was leased by the start of the year and will be opening throughout 2016. The 12-story 250 High, developed by Daimler Group and Kaufman Development, opened last summer. It’s said to be the first new project in decades in downtown Columbus to integrate ground-floor retail and office space with residential units above.
Currently about 30 percent of Columbus residents are 20 to 34, though the ratio may be smaller downtown.
Dallas
The most popular relocation destination for millennials in 2015 was Dallas, according to a survey by moving company Mayflower. Inside the city’s uptown neighborhood, Red Development is creating Union Dallas for a 2017 launch. The development will have 417,000 square feet of office space and 300,000 square feet of apartments in two connected towers.
But the main attraction will likely be Union Dallas’ 60,000-square-foot Tom Thumb grocer on the ground floor adjacent to 27,000 additional square feet of shops and restaurants.
“A lot of the office leasing by some major law firms was driven by the fact that there was a grocery store there,” said Ron Pastore, a principal with retail investment manager AEW Capital.
Added Pastore: “They’re looking at their first-, second-, third- and fourth-year associates, saying, ‘These are people who are going to be making six figures, but they want to live nearby and the closest grocer is a Whole Foods that’s a long way away.’”