The kids really are the future.
In 2020, half of the global workforce will be made up by people born between 1980 and 2000, according to CBRE research. By the next year, millennials will overtake their older peers.
Far more ink than is necessary has been spilled talking about how different this group is from previous generations. Millennials have different work habits and priorities, but ultimately they want the same thing out of a workplace: a space that is comfortable, productive, and convenient within the context of their lives.
As the labor market tightens, companies increasingly are investing in workplaces that will help them get young talent in the door. This makes sense – after all, 78 percent of millennials see the quality of their workplace as important, and 69 percent are willing to prioritize it over other benefits. In response to this demand, commercial real estate professionals in competitive markets have the opportunity to attract the next generation of high-value office tenants by investing in the amenities that millennial workers care about.
They might not watch sports in the same numbers as their parents’ generation, but millennials care about getting exercise.
According to the Nielsen/Les Mills Global Consumer Fitness Survey, they make up almost half of all regular gym-goers. Gen X makes up just shy of a third of this market, and Baby Boomers make up an even fifth.
Perhaps because of the cost of a gym membership or the inconvenience of traveling to the gym regularly, on-site wellness centers are among the amenities that millennials desire most in an office space, according to CBRE. They are also the most under-represented: About 36 percent of millennial workers want a gym at their place of work, but only 15 percent of offices have access to one.
Research also suggests that millennials are less likely to value a steady burn on the treadmill than a workout regimen that involves group work and regularly switching activities, like CrossFit, Zumba, or Pilates. Engagement with amenities is key for driving tenant satisfaction, so consider ditching the expensive equipment and using that budget to invest in a few regular classes.
Millennials, and increasingly their retiring parents, want to live, work and play in the same areas. This has led to investments in mixed-use commercial real estate, which promotes a sense of community.
Millennials eat out more than previous generations, so it makes some sense that they would care about working near restaurants, cafes, and bars. They are also less likely to drive, but just as likely to care about the length of their commute, so it isn’t surprising that they want the opportunity to live near their job, either.
Some commercial buildings have found success in retrofitting to rent space to restaurants or residential tenants. As for type of restaurant, the fast casual category tests the most positively with millennials, particularly for restaurants that are perceived as “local” or selling “fresh” food. Think Chipotle over McDonalds or Olive Garden and a local, farm-to-table sandwich bar over Chipotle.
As millennials become a larger part of the workforce and the consumer base, their commitment to environmental and social responsibility is transferring to the companies that they work for and patronize.
In 2011, 20 percent of Fortune 500 companies published sustainability reports. By 2015, 81 percent did. These reports have become an increasingly important part of attracting and retaining top talent, as well as customers. Companies that fail to cater to millennial sensibilities are in for a rough time, considering that they will make up over a third of all consumer spending by 2020.
Because a company’s workplace is an important factor in its ecological footprint, it is becoming more common for companies to consider a building’s energy efficiency early on in the rental process. Programs like Energy STAR and LEED are implemented in more commercial floor space every year, and buildings certified under them are able to command higher rental rates.
As a part of getting certified or improving a score, commercial buildings often decide to undertake energy efficiency projects. When properly planned, these projects don’t just improve tenant satisfaction; they also pay for themselves through reduced utility costs. These projects can be as complicated and expensive as a whole building envelope overhaul or as simple as submetering units and heavy equipment. Submetering has the added benefit of promoting tenant engagement by showing them and billing them based on their actual utility consumption.
When most people close their eyes and think of young company’s office space, a specific image comes to mind. This trend is no accident: It began as a concession to necessity and has evolved into an attractive, functional design ethos.
According to Commercial Property Executive, the open floor plan that is a near-ubiquitous feature of modern startups started as a cost saving measure. These floor plans make it possible to fit more employees into the same amount of space and make it easy for workers to collaborate and socialize.
As open floor plans caught on, a whole suite of design features evolved to go along with them. Today, millennial companies tend to want features like big windows that let in a lot of natural light, tall unfinished ceilings, exposed brick, and chic lounges. They also, virtually without exception, demand lightning-fast internet.
A caveat: While collaborative work environments are popular, they may not be forever. Only 33 percent of millennials report preferring open floor plans, according to CBRE. Meanwhile, 42 percent of millennials worldwide and about 55 percent in the U.S. aspire to have a private office.
Another of the most under-represented amenities? Green space. About 30 percent of millennial employees want green space in their building, but just about 14 percent of employers provide it.
Greenery naturally reduces stress, particularly the kind of stress that occurs at the office. Office work requires active attention: That means that focusing your mind on work is kind of like flexing a muscle. After a while, that muscle starts to get tired. Research suggests that the best way to reduce the stress that comes from prolonged active attention is to spend some time in passive attention mode. There are a lot of ways to give yourself over to passive attention, but one of the easiest is to spend time surrounded by plants.
There are a lot of great ways to incorporate greenery into an office building. Some properties use green walls, which are “living” walls covered in greenery with lighting and water systems built in to keep them growing. Properties with balconies or courtyards can easily add plants without a large investment.
A third option is to retrofit a building with a green roof. Green roofs are expensive, but they generally pay for themselves over time via decreased energy costs from heating and cooling. They also last about twice as long as traditional roofs, making them an easy choice for new constructions. In many cases, cities will help to pay for an investment in a green roof because of their positive impact on rainwater management.
As millennials make up a larger and larger share of the workforce, catering to their wants and needs in commercial real estate makes sound business sense, particularly for office space in cities and their suburbs, which skew younger. Helping tenants to attract the top talent in their field with targeted, cost-effective amenities is virtually essential in competitive markets.
If some of the amenities trends seem frivolous or strange, take heart: Someday soon, millennials will have to cater to the whims and needs of the next generation.