Are Millennial-Driven Markets in Trouble?
Digested from “The millennial boom is over in D.C. Is that terrible news for the economy?”
The Washington Post (7/17/15) O’Connell, Jonathan
Washington, D.C., has long been touted as recession-proof, in part because of the large number of government jobs based in the area. An influx of millennials during the Great Recession, thanks to the promise of job opportunities, helped the city stay afloat during that period — and grow coming out of it. This young, vibrant population helped the revitalization of neighborhoods such as Shaw, Columbia Heights, NoMa and H Street NE.
But the stream of millennials migrating to the nation’s capital appears to be drying up. The Washington Post reports that millennial population growth (ages 25-34) dropped from 10,430 in 2011 to 2,662 in 2014. Population growth for all other ages from 2011-2014 stayed steady at roughly 7,000-8,000.
But local apartment communities aren’t concerned. W.C. Smith completed a lease-up on 2M Street in the spring; the average tenant is 31, and 60 percent have jobs in the private sector. Holli Beckman, the company’s vice president of marketing and leasing operations, observes that job growth in D.C. has been very strong in 2015 so far and is expected to increase through at least 2017.
“Thirty percent of our residents moved to D.C. from outside of the DMV [D.C., Maryland, Virginia] area. This tells me that millennials are still moving to the D.C. area, and with the threshold for purchasing a home being out of reach for many, renting continues to be the answer,” she says. “While it may not be as robust, the market will steady. Are we moving into a maturing market? Absolutely. But broad statements like ‘the market is drying up’ seem a bit incendiary.”
The Huffington Post identified top markets for millennials as New York City; Arlington, Texas; San Francisco; Denver; Austin, Texas; Minneapolis; Seattle; St. Paul, Minn.; Madison, Wisc.; and Portland, Ore. In addition, the National Apartment Association found that several of these cities will be growing markets in 2016 — namely New York City, Dallas (of which Arlington is a suburb), Seattle, Austin and Denver.
Job growth in Denver is particularly attractive to millennials, The Wall Street Journal reports. Roughly 3,200 firms have helped create more than 165,000 jobs in the area in the past four years, drawing more than 100,000 people moved to the city from out of state between 2010 to 2014. Denver has plans to accommodate this growing population with bike paths and new construction, the latter of which may be contributing to the city’s equally growing rents and traffic issues.
How millennials may impact the continued growth of other markets — some of which, like D.C., are seeing reinvention of neglected neighborhoods attract new residents — remains to be seen. But job growth, a key driver for millennial renters, will more than likely factor into the success of these cities.