What is the single biggest factor on the future of CRE? Demographics – or the basic characteristics of the population. Marcus and Millichamp’s latest guest was Ken Gronbach, who has a new book Upside: Profiting from the Profound Demographic Shifts Ahead.
To Gronbach, it is simple math – mostly having to do with the age cohorts in the population pyramid.
Here are the highlights.
1. Massive shift in elder housing, healthcare, and death care because the Boomers do not have dying on their agenda; they are not like the WWII generation. This demographic shift determines future demand.
2. Millennials (born between 1980 and 1999) will follow other generations info suburbs; they are just later in marrying, procreating, and buying real estate. Some will not marry and stay in the central city. Young retirees may also take CBD housing for the night life. This demographic shift will determine contuinued demand.
3. Because of China’s “One Child Policy” they will not have the advantage of cheap labor, so manufacturing moving back to the US will be a permanent trend. This demographic shift will cause a dramatic shift toward demand for manufacturing facilities.
The most arresting and convincing of his predictions was the effect of what he called “the disastrous” one child policy. Not having replaced older workers and having far too few women, will cause a dramatic shift in the labor pool in China. The US, being a nation of immigrants, will have a stable labor pool. Thus, re-shoring of manufacturing should continue for a generation. Thus, the call for industrial RE is not just a “flash in the pan” situation.
He opines that Millennials, like boomer hippies, will settle down, work, make babies and so forth. But he also says that millennials are consistently more liberal than previous generations.Therefore, the calculation is less than simple on this score.
His prediction about a shift in consumer demand for the graying generation has not been adequately addressed, I think, so there should be some creative innovation coming to provide for the demands from this market. .
Here is Gronbach’s site and his book: https://kgcdirect.com/?page_id=36