Don't Hold Your Breath For Millennials To Move Back To The Suburbs

For the last few years, much has been made of American society’s move into urban areas, for the proximity between living, working and recreation. But developers are taking steps to replicate that experience in the suburbs, with the hopes of swinging the pendulum back.

Much of the drive toward cities is tied together with the low levels of homeownership, the lowest in a half century. Developers are responding by building multifamily developments in the suburbs at a greater rate, and doing so in centers of commercial activity and transit.

“I think people are concentrating their efforts in locations that have a very clear sense of place to them, and offer some nearby amenities,” said Madison Apartment Group’s Greg Curci (below, with wife Chrissy). Curci will be a panelist at Bisnow’s Future of the Burbs in Philadelphia event on Feb. 21 at Valley Forge Casino Resort.

A “sense of place” can often be defined by what is in the immediate, walkable area of a residential development. Plenty are reticent to jump in their cars for every service or night of entertainment they want, so restaurants and grocery stores are crucial elements in placemaking.

Of course, people travel to their jobs more frequently than they buy groceries, so a true live/work/play environment has to include offices. Increasingly, however, proximity to commuter transit options is being treated similarly by developers, although more projects will have to be delivered before we can know if residents see a train station the same way as a walkable office.

“It’s too soon to tell what premium residents will place on [transit],” Curci said. “Clearly, developers are placing a premium on that.”

Even if nothing has been proven, it is clearly a bet that plenty of companies are making for the near future.

“I believe that [residents will value train stations],” Curci said. “More and more, singles and even young couples are looking for ways to get by with no car and one car. It’s very conceivable that people will say, ‘Hey, if I can live at the Lansdale train station with my wife/fiancée, we can live with one car and not two.’”

The commonly held notion is as Millennials age and have kids, they will move back to the suburbs like previous generations, only with a greater attachment to the renter’s lifestyle. But that may not necessarily be the case.

“I’m not seeing a lot of Millennials just yet,” Curci said. “The idea that all of them will move out of the city into the suburbs once they have kids, it's too soon to tell. But logic suggests it will happen."

That is not to say that there is not momentum toward multifamily living in the suburbs — rather, it is tied to the decline in homeownership, as suburban living rearranges itself.

“The bigger demand driver we're currently seeing has been empty nesters, and I’d even say retirees who are looking to downsize out of a five-bedroom home,” Curci said. “I think the near-term future of the suburbs is more pinned to that demographic than Millennials.”

None of that changes the direction of suburban commercial real estate: placemaking is still paramount, with as much diversity as possible in town centers being the goal.

To the extent that any young couples wish to start families, however, the relative quality of schools will be a stroke in the suburbs’ favor for the foreseeable future. And now, child care and education are becoming a part of mixed-use communities like never before.

“Traditionally, our schools have been standalone buildings, but we’re looking for more co-development sites,” Primrose Schools’ Bill Pierquet said. “I think we’re a great addition to mixed-use developments, not only because of the service we provide but because of the type of customer we attract. Having a school immediately accessible to those communities would be like when we place ourselves near large single-family subdivisions.”

Especially in light of Betsy DeVos’ recent confirmation as Secretary of Education, the gap in education (both public vs. private, and suburban vs. urban) looks to be widening. This trend, combined with a possibly relaxed lending environment, provides opportunity for companies like Primrose to meet families where they live.

To be able to integrate a learning center into mixed-use developments can provide a more comprehensive neighborhood environment for young families.

“The movement among developers now is trying to take city living and bring it out into the suburbs,” Pierquet said, “Regardless of location, they're building communities that fit the live/work/play environment, and child care is a crucial element of that.”

Since more than 60% of employers in the Philadelphia metro area are between 10 and 35 miles away from the city, and with little momentum pulling them back into the central business district, more pragmatic reasons could eventually drive a move back to the suburbs for greater numbers of Millennials.

But until that happens, developers will continue to take lessons learned from the success of urban centers and keep trying to make the suburbs more welcoming.