Generation Y -- the age group born between 1979 and 1994 -- is second in size only to the baby boom generation, representing enormous market potential for those in the housing, retail and entertainment development industry who understand their needs and desires.

That was the consensus of a group of industry experts speaking at the Urban Land Institute's (ULI) November meeting in New York City.

With the oldest members of Generation Y now entering their prime spending years, this generation will ultimately "change the economic landscape of America," said Elizabeth Gillespie, vice president of marketing at Jones Lang LaSalle Americas, Inc. in Atlanta.

A profile of this group, also called "echo boomers," shows them to be ethnically diverse (38 percent are non-white), consumed by entertainment, savvy about technology, accomplished multitaskers, and consumptive-oriented, Gillespie said. Last year alone, for example, this generation spent $175 billion, including $22 billion on cell phones.

"They love to shop, they are accustomed to abundance, and they tend to buy disposable items rather than those that can be repaired," she said.

Given their purchasing power and willingness to spend, Generation Y will "determine your fortunes for the next 20 years," Gillespie told those attending the meeting. "To market to this group, you must be flexible, be where they want to be, provide services they care about, and make it fun."

Many of Vestar's retail facilities have been divided into spaces catering to three different market segments -- baby boomers, Generation X and Generation Y -- with apparel, accessories and dining specifically for those age groups in the three sections, said Peter G. Thomas, owner and chief financial officer of the Phoenix, Ariz., development company. For Generation Y, the company provides a mix of high-energy entertainment, such as live bands, surrounded by food and clothing stores in an atmosphere "designed so they can just hang out and be comfortable," he said. The concept has proved hugely popular with both parents and kids.

Because this generation tends to lead extremely structured lives, starting with managed play dates and later with theme camps and multiple scheduled sports and extracurricular activities, echo boomers crave places "where they can just create their own fun," said Lorne Bassel, executive vice president of Intrawest in Montreal, Canada. The company creates entertainment "villages" in its developments with no programmed activities to encourage the younger visitors to "just be," he said. "We leave things unplanned, so they can just be, because they are so controlled otherwise."

According to Pamela M. Hamilton, senior vice president at Centre City Development Corp. in San Diego, the housing needs of Generation Y are proving to be far different than those of their parents. Unlike many baby boomers, who tended to marry and have children soon after college, echo boomers are postponing marriage and parenthood far longer, creating a "gap" period in which their lifestyle is often a carryover of their college days. Because their social interaction centers around night life, rather than entertaining at home, they are satisfied with small -- even tiny -- housing units in edgy locations, Hamilton said.

Moreover, because their post-college income tends to be modest or even unpredictable, echo boomers will accept "unkind" housing conditions in exchange for a lower price or rent, she noted. For those who do choose to buy, glass, metal, aluminum, bold colors, lofts, lots of light, and open floor plans are very popular, Hamilton said, adding that even in less expensive developments, high-speed Internet access is "critical." This group prefers living close to work, recreation, shopping and entertainment, and places a high value on living in areas they perceive as offering a good quality of life, she said. Because they are environmentally conscious, they will seek out developers "they can feel good giving their money to."

A group of students, ranging in age from 16 to 24, joined the industry representatives to provide their own views on reaching out to echo boomers.

"We are very research-oriented, and we will spend the time to scrutinize companies to make sure we are getting the best value for our money," said university student Paul Bonilla of Washington, D.C. "We will spend extra for what we feel is right and of high value."

Nitesh Sapra, a graduate student in New York City, pointed out that his generation adapts easily to new trends. "We are not scared to learn new things, and we are very tolerant of different groups. We look for communities that promote diversity," he said.

Published: December 16, 2004

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