As developers in the real estate industry look to the future, traditional equations for success involving signs facing freeways, ample parking, and big-box spaces are rapidly evolving.
Changes are being driven by the needs and wants of two new generations—Generation Z, whose oldest members are just beginning to get their learner’s permits, and Generation Alpha, which currently encompasses those born from 2010 to 2024.
Panelists at Bisnow’s Houston State of the Market event recently emphasized the importance of understanding what these younger users value.
As Houston’s metropolitan area continues to grow by approximately 100,000 people each year, the demographics are changing, necessitating increased services
However, in an age where there is more competition for attention than ever before, developers must rethink the designs of their stores, offices, and parking lots.
Tom Paterson, Managing Partner at Rebees, mentioned, “We’re at a moment where there’s a big tipping point on issues like parking.”
He pointed out that developers are managing long-term fixed assets amidst a rapidly changing world, which requires innovative thinking.
Maximizing short-term profit may not yield benefits in the future, according to Marc el-Khouri, Associate Principal and Practice Leader at Perkins & Will.
He highlighted the potential advancements in self-driving cars, predicting that in ten years, these vehicles might drop off passengers and park in remote locations, rendering certain parking garages obsolete.
El-Khouri stated, “When we look at parking garages nowadays, we try to future-proof them and design them in ways that, in 10 years, they might be able to get reimagined and adapted to something that could be retail, could be sports facilities, could be vertical parks.”
Designing for the future may require measures like increasing the ceiling heights of new parking garages, which he acknowledged is not the most cost-effective option but could prove valuable in the long run.
Paterson also emphasized the need for municipalities and zoning codes to be proactive in planning.
While parking typically doesn’t generate revenue, regulations often mandate it.
He observed, “I do think that you’re seeing some cities, in a lot of instances, even taking the idea of going from minimums to maximums because the world is changing very quickly.”
Even in areas lacking strict zoning, developers are working to meet minimum market standards to attract tenants, he added.
Austin Alvis, President of NewQuest, pointed out that developers must create projects that facilitate tenant success in order to ensure long-term occupancy.
He noted that a critical aspect of development involves attracting visitors to the centers at various times, effectively prolonging the shopping cycle throughout the day.
According to Arsean Maqami, President of DC Partners, identifying the preferences of the next generation is essential for driving people out of their homes and into commercial spaces.
Maqami observed a shift in nightlife activities among younger people, noting, “I was seeing that young people don’t go to nightclubs, and apparently they go to coffee shop raves.”
This revelation prompted him to consider how these new social activities could translate into profitable ventures.
Understanding the behaviors and desires of Gen Z and Gen Alpha is crucial, especially as the oldest members of Generation Alpha will reach the age of 15 this year.
Maqami stressed the industry’s need to stay current with emerging consumer bases, remarking, “It’s important for all of us, for this industry to keep thriving, [to figure out] what’s that next consumer base, that next generation.”
He continued, “What do they want? What are they desiring? Because then that’s going to drive the yields.”
Focusing on the end user and tenant experiences rather than outdated concepts like parking could enhance long-term development success, said Daniel Ron, co-founder and Managing Partner of Scarlet Capital.
Scarlet’s approach led to successful gains in developing projects in East Downtown and Downtown by prioritizing other aspects over initial parking plans.
Ron noted, “That allowed us to move forward with the developments in areas where the market was going to solve for itself.”
With Houston lacking parking requirements in certain neighborhoods, he saw this as a beneficial advantage as it opens up opportunities for development.
Panelists acknowledged the unpredictability of trends and the inability to foresee the future.
However, they agreed it is crucial to create adaptable designs that can withstand changing consumer preferences over time.
Ron warned that developers are in fierce competition for consumers’ attention, and emphasized the importance of engaging people and encouraging them to return.
He concluded, “So what are you going to do that’s going to keep people coming back time and time again? For us, that’s making things beautiful, that’s keeping things clean, making people feel safe, going back to those core principles that are always going to be true.”
image source from：https://www.bisnow.com/houston/news/construction-development/coffee-shop-raves-houston-developers-plan-spaces-for-the-long-haul-129001
