#birth-rate

The world is experiencing a rapid shift in population. Some regions are experiencing a surge in population, while others are experiencing a decline. This is not merely a matter of numbers. It’s a story about our future. It concerns our economies and the very fabric of our societies. Let’s unpack the complex world of global population trends and what they mean for us all. A Tale of Two Worlds:…

The history of a nation is only a history of its villages written large.           — Woodrow Wilson (1900)

I’ve spent a lot of my time these past few weeks at MIT asking about the human nature behind where we choose to live. I came into MIT with a few things certain in my mind – Millennials are moving to the cities, we’ve adopted the subscription and sharing economy, and generations up and down are following suit. It seemed easy enough to see all around me. Pick a friend from my college, and odds are they’re living in a costal city in a rented apartment. We get into rides with strangers we meet on the internet (Uber), a no-no from the 90′s; we rent our access to music (Spotify) instead of buying albums or downloading them illegally; and we don’t think twice about sleeping in a stranger’s apartment in a foreign town (Airbnb). Three out of four Millennials value experiences over material possessions (Harris Poll), and I can point to a dozen music festivals, remote-work programs, and stories on social media apps to prove it. The jobs we want are also in the cities – jobs that, in order to compete for talent, adapt to the space uses that we need. Out with the cubicle farm; in with the open office floor plan.

So Millennials are moving to the city for jobs and experiences. Then I look up the generational ladder, and my friends’ parents are selling their homes and renting apartments in downtown Tampa. Heck, even my grandmother sold her home of 40 years to move to Villages for the salsa dancing and the mosaic classes. Why did Pam and Steve get the apartment in Tampa? They didn’t have kids or grandparent in the house anymore, they didn’t need the bedroom space or the yard, and they wanted to be closer to the action. People are getting together for the experiences, and I thought, “Oh, this is it – people will continue to move to the city for experiences.”

Then I got coffee with the head of one of the largest office developers in the country, and he turned my whole thesis upside-down.

“I give you 24 months,” he said, “Before this whole thing changes.”

Why?

He’s got two daughters—one two years older, one two years younger, than me—who live in the city. The older one is married and works on one of the perimeter roads looping around Boston. As I learned in Bill Wheaton’s class, most jobs are located on the perimeter of cities, and most job creation occurs on the perimeter as well. (This is a byproduct of high city rents and commuting costs.) Both daughters live downtown, so he and his wife sold the home and moved downtown as well. Everyone’s here for the experiences. Now his eldest daughter is thinking about having kids, and she wants a yard for them, sure – but she also wants a guaranteed seat in a good public school, a shorter commute, and maybe a little home equity. An investment! So she’s going to move closer to her office, get a house with a yard and some other neighbor kiddies, and her parents are going to follow her because the Baby Boomer generation is more mobile and has a different attitude about following their kids.

I took this conversation and I rolled it into the next one. Each person I spoke with was challenging the ideas of the person before. Eventually, conversations with Sam Zell, Bryan Koop, Ian Schrager, and Dennis Frenchman morphed into this idea:

Millennials have moved to the city, and will continue to do so for a few more years. To meet that demand, we have increased supply of rental apartments in most coastal cities for the first time in years. However, it’s likely that, as Millennials get older and have kids, they will move to the near-suburbs and edge cities. Gen Z—and subsequent generations—will take their place in their 20s in the city. Millennials will demand city-like amenities in the suburbs (retail, convenience, accessibility), which will redefine how the suburbs are developed.

Millennials, the sonic boom of the baby boom, are growing older, increasing their purchasing power, and starting to settle down. Nobody agrees on the exact dates for defining the Millennial era, but if we start it at 1980 and we cap it at 1996, the last Millennials just graduated from college. The peak year of birth for this age range is right around when I was born.

According to the New York Times, “the median age of marriage has risen to 29.5 for men and 27.4 for women in 2017, up from 23 for men and 20.8 for women in 1970.” Put a Ring on It? Millennial Couples Are in No Hurry.

Using 2016 data from the National Center for Health Statistics, Dr. Caitlin Myers, associate professor of economics at Middlebury College, reports that the average age of first-time mothers in New York is 31; in San Francisco, it’s 32. The Age That Women Have Babies: The Gap That Divides America.

As I look at my friends a few years older than me in college, I think of this one couple in Dallas that got married a few years back. They just left their fun apartment in Knox-Henderson and bought a little home about a half-hour drive from work. They loved the shops and Trader Joes in Knox-Henderson, but they’re probably thinking of having a kid soon. After all, the average age of a first-time mother with at least a college degree is 30.1 in Dallas.

So what’s the right real estate product for this population in the next twenty years? How do we redefine “Main Street” in Rockwell’s America?