Americans overall are moving less, but young, college-educated people are relocating in large numbers â€” about a million cross state lines each year. The cities where they end up have a shot at becoming tomorrowâ€™s â€œeconomic powerhouses.â€ Thatâ€™s good news for Denver, which is one of the top 5 markets where millennials are moving, according to RealtyTracâ€™s census data analysis.
The influx creates opportunities as well as challenges in commercial real estate.
â€œOne of the main reasons millennials are attracted to Denver is our strong job growth,â€ says Gabe Hill, MAI, a managing director of BBGâ€™s Denver office.
RealtyTrac came to the same conclusion after studying population patterns â€” millennials move where there are opportunities to find jobs.
More jobs and a growing workforce mean greater demand for real estate. Millennials are projected to drive continued growth in the multifamily market in Denver. A recent report on the likeliest cities to attract commercial real estate investment in 2015 pegged Denver retail at No. 5 in the nation and Denverâ€™s office sector at No. 6. (Denver came in fourth overall.)
Denverâ€™s lifestyle and culture are also alluring to young people, Hill says. Millennials in general prefer a walkable urban core, and Denver has several mixed-use, New Urbanist projects in the works that promote their desired lifestyle. Due in part to millennialsâ€™ disinclination to drive, 66 percent of them rank access to public transportation among their top three priorities when considering a move. Denver has made major investments in this area with the renewal of its downtown rail hub.
Legalized marijuana cannot be ignored as both a magnet for many millennials and a driver of commercial real estate. â€œIt definitely is a factor,â€ Hill concedes.
In fact, the rollout of recreational pot in Colorado has led to a rush on industrial warehouse space since state law stipulates the plants must be grown indoors.
Though millennials are high on Denver today, there may be a letdown in a few years when they want to buy property. RealtyTrac recently put Denver on its list of least affordable places for millennials to buy homes. Condos cannot serve as a cheaper alternative because of the extreme shortage of available units. Condominium development has all but ceased in Denver since a state law went into effect in 2010 making it easier for condo owners to sue builders for defective construction. In 2012, condos made up a scant 2 percent of newly built homes compared to about 25 percent in 2006 and 2007.
As the â€œNational Journalâ€ points out, Denver â€œmay not be able to retain the young professionals who have flocked here if it can’t provide more opportunities for them to become homeowners.â€
In the meantime, though, millennials are moving to Denver and making their mark. A â€œDenver Business Journalâ€ headline sums it up best: â€œMillennialsâ€™ desires are reshaping Denver development plans.â€