Real Estate Journal — August 15 - 28, 2014 — 7A


M id A tlantic

M ultifamily F inancing

By R. Brenner Green, Real Property Capital, Inc. “Millennial,” the bubble buzzword?

M y titlemight be a little harsh, but it is time for the “anti-millen-

an increase of roughly 9% over the prior 20 year period. Conceded that these factors do seem to point to increased demand for rental apartments as opposed to home ownership in the short term, and that’s great for everyone, particularly multifamily developers. But that doesn’t mean that every project works because the devel- oper uses the word “millennial” in their pitch. If I hear onemore developer tell a crowd of people that his or her building has high speed internet becausemillenni- als demand it (the rest of us are still on dial-up I guess) or that

they can build 400 units at a horribly congested intersection and actually improve traffic flow because “millennials don’t have cars” I may not be able to con- tain my urge to laugh out loud at the absurdity of the notion. Here is Philadelphia, the revival of the urban core began when the oldest millennials were learning how to use the original iMac 15 plus years ago. The city has moved from a 5 o’clock ghost town to nearly a 24 hour city and millions of s/f of old office and industrial space was converted to apartments. To be fair, walking the streets

in the evening can make any- one old enough to have kids at home feel a little old. But…(and here is the point), the underly- ing forces in Philadelphia and other major cities are strongly engrained and more powerful than the millennials and their population boom. Anyone who envisions a utopic downtown where all of these apartment rentingmillennials growup and decide to eschew that house in the ‘burbs to send their kids to inner city public schools and move from a two bedroom to a three bedroom rental to live there in perpetuity has another

thing coming. “Urban flight” is still alive and well but is moti- vated by high taxes and poor schools rather than racial issues as it was 50 or 60 years ago. So next time you look at a multi- family project as a developer, investor or lender, consider the basics like location and cost and try to set aside the starry eyed notion that it’s custom tailored for the next greatest generation thereby automatically ensuring instant success. R. BrennerGreen is a 15 year veteran in commercial real estate finance and president of Real PropertyCapital, Inc. n

nial article. To be clear, I am not anti- millennial in anywaywhat- soever and I sincerely hope it’s the genera- tion that cures canc e r and

R. Brenner Green

achieves world peace. However I am against the notion that this generation is going to single handedly effect change in the way our society works and lives and utilizes multifamily real estate. I guess I have been to one too many conferences and/ or networking events related to commercial real estate lately where that is all anyone is talk- ing about, so I decided to look a little deeper into this argument and in broad strokes here is what I find to be the reality. 1. Much of the “change” the millennials are credited with ushering in has been occurring since most of them were in dia- pers. Baby boomers like Steve Jobs and Bill Gates created the computer revolution, we Gen X’ers are the ones who dropped out of corporate America to start our own businesses, move back into city centers and chose to get married and have kids later than our parents. The millen- nials haven’t yet accomplished much other than creating a web page that makes it easy to keep track of the lives of your “friends” (the definition of which now includes people you don’t actually know). 2. Presently Millennials have limited power to impact the broader economy due to some macro trends; themushrooming amount of student debt they are under and the lingering effects of the great recession that has acutely affected them. Since the leading edge of the millennial generation began graduating college in 2005, the amount of student loans outstanding has roughly tripledwith the average debt per capita now exceeding $30,000. And the most recent data available shows an unem- ployment rate for those between the ages of 18-29 that is around 50% higher than the overall unemployment rate. 3. The biggest accomplish- ment of millennials is, if nothing else, the fact that there are a lot of them. Births in the period of 1982 to 2002 (roughly how mil- lennials are defined, represent

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