Monday, March 6, 2017

The Urban Shift… to Suburbia

Come sing along with me… nanana-nah… nanana… nah… hey, hey, hey… good-bye!

The cities are starting to lose out on the Millennials.

Over the past 10 years, a good number of American cities have celebrated and been transformed by the young professional and techie Millennials.

Those of us Boomers have watched as the historic roots of the hoods gave way to apartment “loft” complexes, gourmet coffee houses and new organic grocery stores.

Now, a number of demographers, social scientists, economists and real estate consultants are predicting that the growth in demand for urban living is hitting a stall.

As an article in American Demographics states, “There are already some signs that the inflow of young professionals into the cities has reach its peak, and that the outflow of mid-30s couples and new families to the suburbs has resumed after declining since the Great Recession.

Last week, here in the Atlanta-land, two large in-town real estate developers scrapped the plans to build two more live-work-play urban communities.

Is enough now enough… or even more than enough?

The Wall Street journal ran an article about 30 days ago that cited an intown apartment surplus that is unraveling in Austin, Chicago, Nashville, Atlanta and Washington DC.

Not only are forecasts beginning to predict an apartment surplus, others are beginning to predict negative impacts on city budgets as billions of dollars’ worth of new apartments built on the premise that the flood of young people into the cities would continue…dries up.

I find it entertaining on some levels how the developers, marketers and city planners believed that Millennials not only would never slow down, they also banked on the generation never aging!

Another article published on “” notes, “Here is one thing that that we do know: people do get older. And another is that people’s tolerance for small, “tiny home” living is highest when they are young adults.”

In the 2017 calendar year, the leading edge of the Millennials turns 38 years old and the peak of the the Millennial “bell-curve” caps out at age 29.

That means that the number of 20-somthings is actually now on a decline.

A decline!

The U.S. Census Bureau recently released a report that the number of people moving into the cities and out from the cities hit a balance point in 2013.

Since then more people are actually moving out to the suburbs than into the cities.

The trendy and hip bars and cafes are following the trend too.

And the driver for the moves is that the “trendy” and the “hip” is actually more “mass” intown than it once was in the early waves of urban renewal and gentrification.

As I have written before, the same brands that lined the walk-ways in the suburban malls are now the same brands that have moved into the urban live-work-play developments.

Just like “tiny houses” makes a Millennial feel in control, the smaller landscape of the suburban town squares is a whole lot more personal than the vast space of the urban warehouses… further divided up into carbon copy 500 square foot loft apartments.

Dowell Myers is an urban planner at Southern Cal (USC) and was featured in a 2016 Fortune Magazine article about the future of Millennials heading to the suburbs… in droves.

Myers makes note of “what Nielsen calls the Urban ‘Burbs which are essentially walkable, loft-style developments that hug actual suburban and small town town-centers that are trendy and affordable.

He goes on to say that “Millennials love of cities is actually superficial-driven by the desire to be seen in the trendiest bars. If fashion appeal is really all the cities have to offer, there’s no reason a developer-concocted landscape transplanted to a former cornfield can’t satisfy the same need.”

Two weeks ago here in Atlanta, I went down to where the EXPERIENCE office was located for a good portion of our years in business.

Inman Park was the first housing neighborhood built after the Civil War. Its also adjacent to where Dr. Martin Luther King was born and raised and where the King Center For Nonviolent Social Change is headquartered today.

When I was down visiting Inman Park, I was astounded at just how many Millennials now inhabit the neighborhood. As I was walking past an outdoor café, I asked a table of Millennials if they had visited the MLK Center.

They replied, “No, but they had heard that the pub had some very interesting local brews.”

I share this to illustrate that the Millennials are less rooted in the historic roots of the urban ‘hoods and more in the ability to feel hip and cool while working the part-time jobs to pay for the student loans and the tiny loft apartments… that they share with 2–3 other room-mates.

When I moved to Atlanta, I purchased a home in the intown Virginia-Highland neighborhood. It was an area that had a sense of charm. It was also a neighborhood that was undergoing urban renewal largely led by the gay community.

I sold that home eight years ago. In my seven years of owning it, it had nearly doubled in appraised value and the taxes owed on the place each year more than doubled.

Today, it takes about a million dollars to purchase a similar home in the neighborhood.

As the intown neighborhoods gentrify, the Millennails have moved in, but so too have the costs of entry to own a home. Not only can few Millennials even afford an average priced home, very few can afford to purchase intown real estate… period.

An article in the New York Times this past December noted the following… “Hip and cool” core cities like San Francisco, New York and Boston have suffered double-digit percent losses of young professionals. New York City, for example, saw its age 25 to 34 population of 2000 drop by over 15% — a net loss of over 200,000 people — a decade later. San Francisco and Oakland, the core cities of the Bay Area, lost more than 20% of this cohort over the decade, and the city of Boston lost nearly 40%.”

So what does this mean to business?

Perhaps the BGO (blinding glimpse of the obvious) is to avoid getting business revenue tied to a continued prospect of intown gentrification.

Second, if the business has not looked out in the ‘burbs, get in the car and go meet the people who are now moving in.

If you do travel out to the ‘burbs, realize that many of those moving out to the ‘burbs are not necessarily moving out to new, spec-real estate developments. That model has changed.

Third, rethink through what drives the emotional experience of your brand and just how that experience is becoming translated into the next wave of suburban culture.

Finally, I will end this blog with the simple observation that a lot of the business and strategic masses out there have not, and likely will not, understand that this is happening right before their eyes until they are drowning in the next wave of urban crisis.

I have been very good in this blog post and refrained from making tongue in cheek commentary, but I will predict that there will be a share of the techie-geeks, graphic designers and media mavens that be convinced that the out-migration will all be rooted in who sits in the White House versus the person whose name is still on their bumper sticker.

Recite with me… “Make Suburbia and Smalltown America Great Again!”

CEO & Discovery Chief at EXPERIENCE Insight Group, Inc. In the business to discover and craft brand experiences that humans seek out and engage in.