Published March 2004

Baby boomers a force
in commercial real estate

On a hot summer day in the early ’70s, a neighborhood girl came speeding up our hill in her red Mustang screaming out the window at me, “Sex, drugs and rock-and-roll — that’s where it’s at, man!”

I crashed my Schwinn banana seat bike into the ditch to avoid her and remember repeating her words in my mind as I scraped dirt off my knees and picked up the Space Food Sticks that had fallen out of my pocket.

I was too young to know any different and didn’t have any older brothers or sisters to validate or refute her comments.

A few days later, I was shooting baskets in my front yard when Mustang Girl, as we called her, walked over and gave me an earful of advice. I was 10. She was maybe 17. To her, we were light years away from each other.

“This generation is where it’s at, man,” she pontificated. “You just don’t ‘get it,’” she added as I clunked shots off the rim and listened. Then she flipped her long, stringy hair and jogged off — presumably to talk to somebody cool.

I never gave her another thought since — until recently, when I landed on a Web site that told me it had better matter to me what she and her fellow baby boomers wanted, as it will impact commercial real estate for the next 30 years.

I have the advantage of actually being part of the baby boomers, despite Mustang Girl’s view of me in our youth. So what they want should be easy for me to figure out, right? Not so fast.

ResearchWorldwide.com proclaims itself “The Worldwide Commercial Real Estate Information Portal.” According to the site, the over-60 population in the United States represents closer to 18 percent of the total population today, on its way to 25 percent in 45 years.

OK, so nothing new there. We knew there were a lot of boomers, and we knew they’d age. But will they be different than other 60-somethings before them? With people living longer, the question is, how active will they be during the golden years?

Commercial real estate agents and developers have to be prepared to deal with what might be unique spending patterns tied to boomers. Will it be sex, drugs, and rock-and-roll as Mustang Girl said, or maybe hip replacements and heart-friendly restaurants? Demand for space depends on if you guess correctly, it seems.

The answer came as I scrolled on a bit further: “Ultimately, consumer spending levels will drop on non-essential items and, as a result, industrial production, warehousing, retail stores, service providers and office space requirements could be negatively affected. Conversely, affordable restaurants, hotels, casinos, recreation, sporting and entertainment facilities may see increased patronage from a ‘graying’ population seeking some excitement in its retirement.”

So that’s it, then. The Worldwide Commercial Real Estate Information Portal says they’ll all retire and go to casinos, climb rock walls and entertain themselves at all hours of the day.

Then I had a strange thought. With advances in health care, might a healthy boomer be in better shape than previous 60-somethings and, as a result, delay retirement?

Carried a bit further, the longer he or she works, the more is paid into retirement and the more he or she will have to enjoy the retirement years. So there’s a logical tradeoff for working a bit longer if the person in question is healthy.

If my thinking is accurate here, there’ll be more demand, then, for industrial, warehousing, retail and office sectors over retail, hotels and restaurants.

Then I tried to imagine Mustang Girl in her 60s. I pictured her driving a hunter green Buick at a more sedate pace. Then I tried to imagine her shouting out the window, “Working longer, funding my IRA, and delaying my retirement — that’s where it’s at, man!”

What? I broke out of my haze. Then I realized she was right. I just don’t “get it.”

Tom Hoban is CEO of Everett-based Coast Real Estate Services, a property management and real estate advisory company specializing in multi-family and commercial investment properties. He can be contacted by phone at 425-339-3638 or send e-mail to tomhoban@coastmgt.com.

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