This decade marks one of seismic demographic change. Baby Boomers will leave the workforce and Generation X will march ever closer to retirement age, to be replaced by Generation Y/Millennials and Generation Z as the dominant generations in the workplace.
This has major implications for real estate occupiers, investors and policy-makers around the world, according to a new research report from Cushman & Wakefield, Demographic Shifts: The World in 2030. The report analyzes the seismic shifts in international workforces as 693 million Baby Boomers reach retirement age and 1.3 billion members of Gen Z enter the labor force during the next 10 years.
“Generation Z is actually the largest cohort in the world with just under two billion people–26% of the global population,” Kevin Thorpe, global chief economist and head of research with Cushman & Wakefield, tells GlobeSt.com. “Even as the largest generation in human history, it accounts for a considerably smaller proportion of the total population because people are living so much longer. It is certainly possible that we will look back and view Generation Z in a similar light as Generation X, squeezed between two more talked about generations.”
The impacts of this will permeate through all facets of the real estate sector, from the composition of the workforce to how the nature of work changes, from where people live and work to how they shop and relax. While these trends will take place across countries, the most acute effects will be felt at the city and local levels.
The report analyzes four key demographic issues: the aging of Baby Boomers, the progression of Millennials through the life course, the difference between Generation Z and Millennials, and the impacts on the world’s cities. The report extends a global viewpoint and takes the perspectives of both occupiers and investors to identify opportunities and challenges that will be encountered by 2030.
“These demographic trends will drive the pace of growth in cities around the world,” said Dr. Dominic Brown, head of insight and analysis, Asia Pacific at Cushman & Wakefield. “Cities will need to establish themselves as places to attract the highest quality workers and in turn, create the greatest real estate opportunities for occupiers and investors alike.”
Cushman & Wakefield compared labor force growth and GDP growth of more than 137 cities worldwide. Cities with high growth in both categories have the best prospects for strong real estate demand, while slow growth in both categories indicates a lagging market. Cities with faster growth in GDP than in the working-age population are high productivity markets that may appeal to investors as they rise up the value proposition. Those with greater growth in labor than GDP are considered low productivity markets that need to harness that attraction of talent to boost output.