You know this already – if you are in the retail business, catering to millennial consumers needs to be a key part of your strategy. This generation of the 80 million people born after 1980 is an undeniable consumer force. Overall, Millennials spend about $600 billion per year. Millennial women buy one-third more clothing per year than older women, across income and racial groups. Millennial men spend twice as much on clothing as older men do. Total consumer spending by Millennials is expected to grow 20% over the next 5 years. By 2020, Millennials are expected to make up at least 30% of all retail sales. While the Millennials’ propensity to shop online is constantly touted, the fact is that still over 75% of Millennials’ shopping is done in bricks-and-mortar retail locations.

Driving Less and Shopping More

Another important fact about Millennials, however, is that they are driving less than any generation since the Second World War. By a lot of measures, America’s love affair with the car seems to be gradually ending. The number of vehicle miles traveled per capita has been dropping for a decade. Today, only about 50% of Millennials even apply for a driver’s license at the age of 18. The recent drop in retail gasoline prices clouds the picture a bit, and the fact that we are possibly at the very beginning of a new transport paradigm has caused a lot of government and real estate planners to over-estimate the likely future propensity of Americans to drive. This may mean that we are currently over-investing in highways and other car-centric public infrastructure. It may also mean that commercial real estate business people need to give a little more thought to public transit as they plan new projects, especially projects that need to have relevance over the medium to long-term and with Millennial consumers.

In tandem with the decline in vehicle miles traveled is the change in metro area development patterns. As Cushman-Wakefield reports,
The “re-urbanization” of America is driving the transformation of our urban centers in ways that are shaping many property sectors. These opportunities for change are best seen in the one property type that has traditionally shown its propensity to adapt itself: Retail.”

This “re-urbanization” is affecting not only the traditional urban core but also the suburban fringes. Many of the long-established suburban communities are gradually being re-made with a new “urban sensibility” that makes development look and feel a lot like that in the old urban center – dense, multi-use developments with easy accessibility to public transit. Millennials all over the country, whether they live in the urban center or in the suburbs, are coming to expect a new model of development in which residential, office and commercial/retail uses are all nearby and in which public transit is universally accessible everywhere they frequent.

Defending Against Volatility with Transit

Not only is paying attention to the accessibility of public transit likely to lead to better retail market penetration with Millennials over the long-term, but it is also a good defensive strategy for dealing with economic uncertainty – especially softness in the retail sector – in the near to mid-range. Studies consistently show that, nationwide, the economic performance of locations with access to public transit economically outperform non-accessible areas in their metro region by an average of over 40%. We can expect that slow growth and some measure of volatility will continue in the US economy for a while at least. Under these circumstances, planning for accessibility to public transportation is a good way to hedge your bet.

The Great Recession era has been very tough on retail, and the uncertainty of the future makes planning decisions difficult. In this challenging climate, it makes sense to limit the loss factors as much as possible. Pay attention to accessibility to public transit when you make your real estate choices and that can be one element of stability in your business plan.