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Wednesday, June 10, 2015

When will Commuting be Obsolete?

By: Rand Stephens (Houston)

Research shows that Millennials (ages 17-34) do not want to commute, nor do they want cars.  Cars are expensive and commuting is a time waster! Millennials want mobility to enhance lifestyle, not drag it down.  This mindset is not owned only by the Millennials, it is also becoming more prevalent among the Baby Boomers. As a result, some real estate trends are being established that will not be going away.

Mobility means free movement without restrictions: to be able to live, work, and play in an environment where all three functions are interconnected and seamless. This allows families and friends to spend more time together, and for people to have “me time”, while getting the job done and having a fulfilling career. Technology allows this to happen and has opened everyone’s eyes to the possibilities of an enhanced lifestyle through improved mobility. 

Here are some of the major trends around mobility:

Mixed-Use Developments
These projects incorporate buildings that have multiple uses designed around a central public space that enhances the public’s experience (see my February 2014 blog posting “Live, Work and Play Lifestyles”). This set up provides functionality for people to live, work and play in the same place with less time in the car.  These types of projects have been around for a while in cities with dense populations, like New York.  However, mixed-use developments are springing up in other cities around the US, particularly in the south.  These types of developments were once thought to only work in the inner core of an urban area, although they are proving to be very successful in suburban communities as well.

Customized Transportation vs. Public Transportation
Who really likes public transportation?  It is inefficient and does not enhance quality of life; both are major problems for Millennials.  However, public transportation is inexpensive and not bad for moving a large number of people from point A to B. It serves a purpose for commuting to and from work where there’s a central pick-up and drop-off point, but fails in most cities in getting people around town. 

Companies like Uber, in conjunction with ZipCar and Cars2Go, are providing on-demand transportation options that are being fully embraced by people of all ages and are the way of the future. 

Once Google perfects its driverless car, which is not far from happening, customized transportation will explode.  Imagine being able to order a driverless car, with virtually no wait, that picks you up wherever you are and drops you off wherever you want. This concept gives a person the flexibility to ride alone, or to customize carpooling with friends and co-workers. 

Municipal investment in public transportation traditionally has been very beneficial for increasing real estate values. Although for US cities that do not have one central business core, they need to examine how to best allocate public funding for transportation infrastructure.

Less is More
Less living space is the way of the future.  The Boomers are selling their homes and renting an apartment or buying a condo in a cool urban environment in order to embrace the live, work, and play lifestyle that Millennials are demanding.  In addition, as Boomers retire, they want to do fun things like travel, and don’t want to be burdened with everything that homeownership entails.  There is a separate, rapidly growing trend of Boomers selling their homes to reinvest their equity in smaller residences in different locations to facilitate travel.

The Millennials want to be on the move like their parents but for new jobs and for careers that call for global travel.  They want functionality in an awesome location and have no problem with minimal accommodations as long as it’s affordable and supports their mobile lifestyle. 

And, the need for office space and parking will continue to decline, too.  As the Millennials move into executive positions and drive their lifestyle views through their organizations, the workplace will be less about individuals having an office| workstation| parking space, but about doing business from anywhere as people team and collaborate across geographies in a wireless and paperless environment.

The postings on this site are those of the bloggers and do not necessarily represent the views or opinions of Avison Young.