The Generation Z world: Shifts in urban design, architecture and the corporate workplace.
CORPORATE REAL ESTATE JOURNAL vol. 7 no. 3, 2018
ABSTRACT | Gen Z is expected to surpass Millennials in number by 2020 and potentially represent 40 per cent of consumers in the US alone. By 2030, 20 per cent of the workforce will be Generation Z (Gen Z) (see Figure 1). They differ from Millennials in substantive ways. They represent changes to all aspects of corporate real estate (CRE) through their expectations in the workplace, retail, residential, cultural and lifestyle environments. To begin to understand the shifts in urban design, architecture, and the workplace this generation will lead, this paper begins by listening to Gen Z on their own terms. A frame of reference outside this lens would miss their perspective and how it rightfully presents their relevant world view, goals and aspirations that will impact CRE. Through presenting data, trends and metrics, the paper addresses technology, transportation, uses and new building typologies, and the impact this new generation will have on evolving cultural and social norms that inform tomorrow’s environments. We present five foci for design and decision making and the features behind them to discover how this emerging population may influence today’s real estate strategies and tomorrow’s real estate value propositions.
KEYWORDS | Gen Z, future cities, urban/ building technologies, placemaking, future mobility, changing workforce flexibility, authenticity, choice, convenience, integrated/interactive world GEN Z
GEN Z | generally is born between 1995 and 2012. They number approximately 64.6m or 20 per cent of the US today.1 While research on Gen Z is relatively new, a substantial level of agreement about their core characteristics in the US was found, and to some extent internationally, across the studies that underlie this paper. These studies range from large 1,000 to 4,000-plus respondent online surveys to smaller in-depth focus groups to gain deeper insight into daily activities and personal motivation. Of these, the 2016 Randstadt/ Future Workplace study (4,066 respondents conducted by Morar Consulting), the 2015 Adecco study (1,001 respondents) and the 2013 TD Ameritrade study (1,000 respondents conducted by Head Solutions Group) included late Millennials and Gen Z in almost equal proportions.
The 2016 Barkley/Future Cast LLC study included four generations and combined its survey with interactive sessions with Gen Z teens. Three surveys by the Stillmans (introduced later in this paper) and the Institute for Corporate Productivity (i4cp) in 2015 and 2016, each with 1,500 respondents, focused solely on Gen Z with input and analysis from a VANTAGE business immersion high school program. Altitude built on data from the 2013 TD Ameritrade survey with a series of in-depth discussions, video diaries, and daily interactive exercises held across the country and designed to glimpse the lives of over a dozen 16 to 18-year-olds from diverse backgrounds.
Gen Z influence, from buying behaviours to issues of attraction and retention in the workplace, will be powerful and critical to real estate clients. Yet, if one were to renovate an office building today, by the time the investment fully depreciated (15 years), more than 35 per cent of employees will be Gen Z. If one were to build a new facility, this percentage will nearly double by the time the investment has fully depreciated. It is time to be aware and prepare for the shifts in the built environment this generation is sure to influence.
Across current research on Gen Z, three factors stand out as foundational to both their world view and behaviour: realism, digital technology and growing up in uncertainty. Their influence can be seen in Gen Z attitudes, goals and their definition of work and life.
REALISM | ‘To be successful, I will need to know how to manage money and think critically’. Laura
The majority of Gen Z’s parents are part of Generation X (Gen X). Unlike Baby Boomers who raised Millennials to believe they could do anything, Gen X parents have taken a very pragmatic attitude, encouraging their children to work and think strategically, build practical skills and get comfortable making trade-offs.
As a result, much of Gen Z’s behaviour is driven by down-to-earth practicality and a desire to be self-reliant in career planning. Jonah Stillman, who co-authored Gen Z @ Work with David Stillman, notes that ‘it’s not that mom and dad didn’t believe in us; it’s that they told us if CEO is the goal, it’s not going to be easy, and besides that, might not be likely to happen at all’.
FINANCIAL LITERACY | Gen Z grew up seeing their parents and older siblings struggle with debt. They saw up to 36 per cent of their siblings and friends aged 18 to 31 move back in with parents, with approximately 30 per cent of these homeward bounders citing high debt load (especially student debt) for their return. During the Great Recession of 2008, they witnessed the trauma of parents losing jobs and a lifetime of financial investments followed by putting off retirement plans. They were aware when the majority of family savings went to an older siblings’ tuition, leaving those younger with fewer financial options for their higher education. Gen Z became obsessed with financial literacy and highly debt-adverse, with 83 per cent reporting ‘saving money is important at this stage of life’.
Gen Z understands that future financial stability will require making sacrifices and conservative budgeting. With seven in 10 college seniors (71 per cent) graduating in 2015 with an average of $29,400 in student debt, they are determined not to let debt or financial mismanagement overwhelm their future.
DRIVE | ‘4 out of 5 students believe they are more driven than their peers’.
As with their Gen X parents, Gen Z believes effort, determination and merit will win over native ability. With 56 per cent of their parents worried about their professional success, Gen Z has internalised a drive to become marketable in the workplace with competitive advantages over their peers. Fifty-five per cent of students feel pressure from their parents to gain early professional experience. In 2010–11, 1.3m US high school students took classes for college credit during the school year to improve their college placement and save money through early graduation. With 79 per cent of high school students worried about finding employment after college, Gen Z is choosing career-focused, higher education programmes in such fields as healthcare (21 per cent expected growth by 2022) and education (11.1 per cent expected growth by 2027).
Gen Z is intent upon understanding the consequences of their actions as well as weighing risks and benefits of their choices against potential future opportunities. Unlike Millennials, Gen Z is willing to trade broad experiences for fewer, deeper ones. In an effort to differentiate themselves from their peers, Gen Z seeks specialization in a few key areas; 72 per cent say they are competitive with people doing the same job according to Stillman. Yet while their parents taught them to win, they also taught them to lose well, take the learning curve seriously and hit it again.
BEING PHIGITAL | Gen Z has grown up in a networked world that transcends boundaries defined by previous generations. From Gen Z’s perspective, there is no distinction between physical/analogue and digital/virtual experiences; it is simply how life has always been. When they were young, televisions, laptops, desktops, tablets and phones were connection, entertainment and play — and now that they are older, these are research tools, shopping channels and payment options. Ninety-one per cent of Gen Z say that their choice to work at a company depends on its level of technological sophistication.
DIGITAL PERSONAS | Soberly aware of the power of an online presence, this generation is defined by multiple, fluid online personas, and according to Jaclyn Suzuki of Ziba Design, more than 75 per cent of teens today feel comfortable having them. They curate different social media personas to please each audience and minimise conflict, controversy and trouble. In their drive to get ahead, curating and maintaining their personal brand is important as they differentiate themselves among their peers and for marketability. The Stillman report that 56 per cent of Gen Z even want to write their own job titles and descriptions.
On a personal level, Gen Z seeks immediate validation and acceptance through social media as it’s where they communicate with peers and maintain personal relationships. On a professional level, Gen Z is hyperaware of the negative social stereotypes that have plagued Millennials; they recognise that every online action can last forever and ruin both careers and lives. They are also acutely aware of how older generations view the ‘younger generation’s addiction’ to the Internet. Between these two forces, Gen Z feels torn: they do not want to be defined by technology while they need social media to build their personal brands. The result is immense pressure to manage their personal and professional brands to fit in while standing out.
Ultimately, Gen Z wants to be recognised for their ability to work hard and their capabilities offline. Nearly three in four prefer to communicate face-to-face, with 51 per cent seeking face-to-face communications with managers over emailing (16 per cent) or instant messaging (11 per cent). They understand that with advancing automation, remaining jobs will require the ability to work with others and quickly develop meaningful human connections.
UNCERTAINTY | Clarity, Control and Predictability On one hand, Gen Z harbours fear of missing out on anything, fueling intense Internet activity to stay on top of trends. They are proud of being open-minded and they respect the opinions of others. As the most ethnically diverse generation in US history,23 their defining issues are racial equality (72 per cent), gender equality (64 per cent) and sexual orientation equality (48 per cent).
On the other hand, Gen Z takes comfort in the familiar rather than actively seeking out adventure. Globalisation has made the world seem smaller and more connected while intensifying Gen Z’s desire to surround themselves with friends, family and other sources of security and validation. Information that makes it through this filter is confirmed by their social circles, creating a closed, homogenous system with no conflicts — an ‘echo chamber’. The risk is a generation that, despite their best aspirations, lacks the skill to negotiate difference.
This does not, however, mean they are sitting back, waiting for something to happen — they would rather take control. Gen Z’s penchant for involvement and interaction is seen in their competitive, fiercely independent and action-oriented character. In their 2015 study of 12 to 24-year olds in the US, the market research firm Wildness found this cohort not only consumed entertainment, but was creating and shaping it. With 80 per cent of Gen Z declaring their creativity is important to them, they are ‘empowered, connected, empathetic self-starters’ that want to stand out and make a difference in the world. They have defined a standard that values uniqueness, authenticity, creativity, share-ability and recognition. Technology is an important component, but what has really changed is how this generation uses it to co-create culture.
Furthermore, 71 per cent of respondents to the Stillman national survey said they believe that ‘if you want it done right, then do it yourself’. Add to this the Gen Z wishes to be recognised for a range of skills, including the creativity that they value, and we may see both more functions handled in-house and a rise in the freelance economy.
FIVE PRINCIPLES | ‘We need to look at Gen Z not just as a generation, but as a new set of behaviors and attitudes about how the world will work and how we will need to respond in order to stay current, competitive and relevant’.
FLEXIBILITY
AUTHENTICITY
CHOICE
CONVENIENCE
INTEGRATION
What can we expect in our cities, buildings and workplaces?
At 84.7m strong by 2020,30 Gen Z’s characteristics — tech savvy, realistic, multifaceted and determined — will inform how we approach the design and development of our future cities, buildings and workplaces. While there are many considerations, we identified five principles to guide decision making for corporate real estate to attract, retain and uphold productivity of this oncoming Gen Z workforce. Our review of characteristics of Gen Z will inform lifestyle patterns that will be demanded.
ABSTRACT OF ARTICLE CO-AUTHORED BY WILLIAM HODGES HENDRIX AND HGA TEAM FOR CORPORATE REAL ESTATE JOURNAL 2018