The Commercial Observer is out with a piece Monday that looks at a Nuveen study and predicts where millennials are likely to migrate.
The company has identified eight major cities it believes are “at greatest risk of losing higher income OM renters to suburban homeownership”: New York, Boston, Denver, Seattle, San Francisco, San Jose, Los Angeles, and San Diego.
Nuveen Real Estate has determined that OMs leaving these “flight to suburb” cities “will create an investment opportunity in the over-built luxury and Class A apartment markets, particularly in large, expensive major metros across the U.S.”
The report’s analysis determined that “these eight cities experienced a large influx of Millennials in the last decade due to their strong post-recessionary job growth,” and that those Millennials are now largely renters. With home ownership rates for the 35-39 age group at 56.8 percent, Nuveen is assuming a 60 percent ownership rate for the group moving forward, which translates to “roughly 1.3 million at risk to flee to suburban locations and purchase a single-family home.” The company also believes that the other 40 percent—close to one million Millennials—are likely to seek out more affordable cities.
