Colorado Real Estate Journal – April 5, 2017
by John Rebchook
Millennials making it, mostly renting in Mile High City
Millennials. Every city wants them. Denver is actually getting them.
A fair share of the 10,000 or so people moving to the Mile High City every month are in the coveted demographic group. Many of these millennials are renters, good news for the Denver area multifamily market.
“Millennials are the biggest generation ever” and also are the most educated group ever, noted John Burns, CEO of John Burns Real Estate Consulting.
Burns, who is based in California, made those millennial comments earlier this year at a ULI Colorado event. But Burns said that the word “millennial” as a catchall definition for people born between 1984 and 2002 doesn’t make much sense.
“If you are talking to millennials born in the ’80s and those born in the 1990s, you will have a much different conversation,” Burns said.
He decided to dig deeper into the demographic trends.
After three years and 9,000 hours of research, his firm came up with eight different demographics to describe those born in decades from the 1930s to the 2000s. Burns and co-author Chris Porter summed up their findings in a book: “Big Shifts Ahead: Demographic Clarity for Business.”
“Denver looks a little different” than other parts of the country, Burns said.
“Denver is more skewed to those born in the ’80s and in the ’70s than anywhere else in the country,” he said.
Those born in the 1970s, he has dubbed as the “balancers,” and those born in the 1980s are the “sharers.” Those two millennial demographics account for 33.4 percent of the Denver area population, according to research by Burns.
The balancers, of course, want everything: balance between work, family and play.
The sharers are the earliest generation of millennials. They also like social media, such as Facebook, lnstagram and Snapchat. They also remember the hard economic lessons of the Great Recession.
“They learned their lessons from their parents and are afraid of debt,” Burns said.
That is, other than student debt, as they are saddled with much of the $1.2 trillion in debt in the U.S., he pointed out.
Denver, he said, has been a leader in master-planned communities that provide housing, retail and offices in places such as Stapleton, Lowry and Arvada.
“Give me urban with great schools and you can’t miss,” according to Burns.
These are what he calls “surbans,” communities with suburban and urban qualities.
“Give me cool urban in the suburbs. Love that urban feel. Surban sounds better than mixed-use,” Burns said.
Because Denver skews younger than much the U.S., that bodes well for the apartment market, according to Chris Porter, the chief demographer and researcher at Burns, who in addition to being the co-author of Big Shifts Ahead, is the chief demographer and researcher at Burns Real Estate Consulting.
“We know right now the younger population is delaying many of the big milestones in life, like buying a home, and not necessarily by choice,” Porter said.
“As a group, as they enter adulthood, they are tending to rent,” Porter added. “That should boost the apartment market, purely as a demographic shift.”
Indeed, a national report released last week by Florida International University and Florida Atlantic University said that Denver is one of only three cities in the nation where renting an apartment carries less risk than buying a home. The report, by Beracha, Hardin & Johnson, ranked Denver with Dallas and Houston because of rapidly rising home prices.
“It probably does make more sense to rent than to buy in Denver right now,” Porter agreed.
On the other hand, he is not down on the Denver housing market, either. In fact, it is somewhat of a Goldilocks market – not too hot and not too cold, according to Porter.
The younger population in Denver also is good news for restaurants, he noted.
“One thing we are noticing and something you will see across the country is that younger buyers are more cost-conscious,” Porter said.
“They don’t want to rely too heavily on debt and they use debit cards instead of credit cards,” he said.
At the same time, they are more into “experiences than possessions.” “They are willing to pay for experiences. I think if retail and restaurants can help create an experience for them, that will resonate with them.”