The retail, healthcare, multifamily and hospitality sectors are all seeing gains from America’s two biggest generations — the Baby Boomers and the Millennials, as each reaches a different life stage. According to research from Marcus & Millichap, these two groups comprise 150 million Americans whose spending makes up 30 percent of the U.S. GDP. That’s a lot of buying power and a boost for the commercial real estate industry. Here’s a look at some key findings:
Multifamily Gains — Millennials, the renting generation, have fueled the completion of 215,000 new apartment units over the past 12 months. With the absorption of 237,000 units, vacancy has fallen to 4.2 percent, leaving developers room to build even more.
Restaurants Rules — Because they’re not spending on houses and goods, many millennials are spending more on experiences. The bar and restaurant industry has seen a 6.5 percent gain in sales over the last year.
Hotel occupancy is up — to 60.7 percent in the first quarter of 2016, making it the second highest quarter on record, according to Marcus & Millichap.
Retail is stronger — Some millennial are starting to settle down and buy homes or move out from roommate situations, leading to a large increase in spending in several retail sectors. Both home furnishing and home improvement retail stores have seen a 3.6 percent increase over the past year.
Don’t forget the Boomers — Medication sales, plus an expanded pool of Boomers with insurance pushed sales at drug stores up 8.3 percent from a year ago.
By 2020, 57 million people — 16 percent of the population — will be over 65. Don’t count this age group out, as the spending is likely to continue to drive these key sectors.