How Millennials are Moving the Urban Housing Market in Amenities and Features

Who’s driving today’s market when it comes to unit size, features and amenities? According to Laura Gollinger, Vice President of The Collaborative Companies (TCC), two groups more than a generation apart are speaking up and developers are listening.

In the first of a two-part series, we’ll explore what Millennials demand when it comes to their living spaces; the second, how Baby Boomers (aka Empty Nesters) are driving decisions based on space and amenities.

Despite the 20-year age difference, both generations agree the convenience of living in the urban core and the ability to access amenities that reflect how they choose to live, work and play are key factors in their overall decisions.

How has the market changed for Millennials?

I always divide Millennials into two groups: younger millennials in their mid-to-late -20’s who are likely renting for the first time and those in their early to mid-30’s with more disposable income that can afford a down payment on a $500,000-$1 million dollar condominium.

As rents continue to skyrocket in and around the city, younger Millennials are paying more for smaller individual spaces rather than being forced to move in with roommates. We’ve seen micro-units popping up around the city this year and expect this trend will continue for the next few years.

When it comes to the condo buying Millennial, key factors are efficiency and functionality of space. They won’t pay more money just to get additional square footage. They will, however, pay for more functional rooms created from that square footage. For example, a 1,100 square foot one bedroom unit and den with one bath at $800 per square foot won’t cut it because the absolute dollar value is too high. That unit ends up being just under $900,000 and that’s before broker fees and closing costs are added.

However, if you change the footprint, you change the mindset. Millennials would rather invest in a unit with that same square footage built as a two bedroom, two bath condo. We are witnessing a significant shift in developers’ thought processes when it comes to unit sizes for various bedroom/bathroom combinations, as prices continue to appreciate in the city.

What are some of the building amenities that are most sought after for Millennials?

One of the driving factors for Millennials when it comes to amenities is that they grew up with unlimited access to technology and their expectations to stay connected are top priority. They often prefer “individualized socialization”, which means that they like the idea of sitting near each other but want to be able to communicate with other people via their iPhones and smart phones. This is their version of socializing.

To do this, developers must create big, open multi-purpose common spaces like roof decks with fire pits and interior seating arrangements that offer both openness and a sense of privacy.

Pet-friendly amenities are important to this demographic, as many are having children later in life and consider pets “their babies”.

Other amenities that are popular include bike tune-up stations in designated bike rooms. Fewer people are driving to work daily, Millennials in particular. In fact, a recent study reported that 65% of Millennials would rather give up their car, than their phone.

Most luxury buildings in Boston have diverse amenity packages that run $1.15+ per square foot per month. For a first-time Millennial buyer who is already struggling to come up with a 20% down payment, having to pay $850 per month for amenities on a 725-square foot one bedroom one bathroom is quite steep. Developers who offer a solid package that keep costs reasonable on a monthly basis is more likely to win over this group.

For Millennial renters, however, it’s the opposite. They have access to huge amenity packages in luxury buildings that include pools, bocce courts, thousands of square feet of common space and more. Yet how many amenities can be jammed into one building and do they really reflect the residents’ lifestyles? To a Millennial it renter it doesn’t matter, they expect it, and like the thought of knowing that they have access to it whenever they want, regardless of usage. This is why Millennials are willing to pay such high prices in these larger/luxury apartment buildings.

What are some features in units that are most attractive to Millennials?

Modular furniture is popular right now. As many agree to live in smaller spaces that lack of closet space comes back to haunt. So including anything that folds up, folds out/in, or offers multi-purpose functionality is important. As micro units continue to flood the market expect to see more features like beds that fold down from walls or conversion furniture that can double as a sofa, a table or bed. GE just recently launched its micro kitchen concept that takes and entire kitchen and all major appliances, and compacts into a six foot island where everything pulls out via drawers.

What’s “out” these days?

Gone are small closets, enclosed kitchens with little room to do anything but cook, traditional cabinets, and lamps or other plug-ins, tile and carpet, formal dining rooms, and freestanding stainless appliances. Apliances that resember cabinet panels, and hidden wardrobes, as opposed to traditional walk in closets are appearing in units across the country and the openness of a “New Great Room” that provides multi-purpose open space is “in”.

Tech-savvy homes and devices are HUGE with this generation, so we are seeing things like USB outlets, and millennials willing to spend money on things like curved televisions

With the exception of the extreme high-end luxury units, for condominiums, doormen are out, and concierges, depending on the building and if there is one, are not necessary on duty 24-hours a day.

For condominium buyers pools are not as desirable as they once were, due to the cost of maintenance and unless it’s an indoor pool, you’re paying year round for between three-to-five months of use. Bringing back to the thought that Millennial condominium buyers don’t want to pay for amenities that they don’t use frequently ,as it brings up their monthly association costs and creates an affordability issue in particular for smaller units.

When it comes to parking, Millennials are fine with any kind of parking they can get and don’t want to pay valet fees as it adds to their HOA fees. They are willing to park across the street as long as they can buy a designated space at a decent price and wrap it into their monthly mortgage (especially since parking rental prices range from $200-$375 a month right now).