As Millennials drive more US cities to adolescence, what happens to the delivery ecosystem?
Leaving college sucks. For the lucky ones who get to go to a four-year residential college, it is such a bubble of like-minded friendship, aligned goals, shared stage-of-life challenges and community. Especially community. Everyone you want to see lives a five minute walk away. The idea of planning a social event seems ridiculous. Why not just show up and see who’s there?
At 22, with my first real job, I remember a strong sense of loneliness between 8pm and midnight. I lived in Los Angeles at the time, which meant even my nearest friends were a 20 minute drive away. Long enough that if I wanted to see friends, I had to make plans.
And this sense of loneliness, of the difficulty in planning to eradicate it, I think, is what the Millennials have opted to erase from our national landscape. I’ve spent the last five years traveling around the US, first to grow Taco Bell, and now to grow Kitchen United. What I’ve seen is that every major city is reframing itself to be more urban. Multi-family housing growth is increasing rapidly year-on-year – most of it in the denser urban cores or along rail lines leading out of those cores.
Part of this is driven from necessity – we are running out of infinite land to develop into McMansions, running out of air to pollute on our long commutes, running out of the money required to abandon infrastructure in one part of town in favor of creating new infrastructure where there had been none. Part of this is driven from desire – after watching our parents become hoarders of consumer goods in isolating 4,000sf homes then nearly lose all of it in The Great Recession, we just don’t want the things that seemed important in 2006.d
Demographers debate whether Millennials are really more urban than prior generations. According to a 2015 article in Governing, “most of them actually live in suburbs.” More accurately, at that time, most of the Millennial suburban dwellers were living there in their parents’ homes. Joel Kotkin argues that affordability is the key driver for Millennial residential choices, and the largest, trendiest urban centers are decidedly not affordable. But townhomes, condos, and large apartment complexes are affordable – much more so than a 2,000sf home on a half-acre lot.
So what is happening here? America, led by the Millennials, but joined by empty-nester Boomers, is moving back towards walking-scale spaces, recognizable neighbors, and local hangout options. Not everyone can afford to (or wants to) live in the largest, trendiest urban cores, but increasingly, we are all longing for the “feel” of urban-ness. Realtors notice their Millennial clients seeking “surban” communities to call home. CBRE notes that this trend is visible in the Census data. Though Millennials might be moving to the suburbs, they are looking for a specific kind of suburb, and the suburbs are changing to accommodate their desires.
Instead of looking at the most expensive urban cores, if one looks at America based on density, there is a definite correlation between density and age. The lower the density, the older the population. The higher the density, the younger.
The last few months have been especially fun for me. I’ve gone to most of the Top 25 largest cities in the United States. There are cranes everywhere. Without exception, every city I went to in 2018 has people moving back to the urban core. Places that were once busy workday/evening ghost towns are now alive with live/work/play mixed-use developments. Even the least likely of places are purposefully working to become more dense with less sprawl. In my own notoriously suburban Orange County, California, multi-family housing starts have outpaced single-family for 9 of the last 10 years. For those of us on the coasts, it is impossible to imagine that “small town” Middle-America Columbus, OH is growing its population at twice the national rate and is making a concerted effort to do so in a more space-efficient way.
Like many idealist students of politics in the 1990’s, I longed for a more European way of life. Why couldn’t we take public transportation to work and walk to dinner or shopping? Why didn’t I run into the same friends at the same local cafés? Why was my Saturday built around buying large quantities of consumer goods so I could stock up for things impossible to buy without driving to a destination power center? Why were my assets (and corresponding debts) set up to enable these weekly trips?
Density makes the economics of most things easier, but especially delivery. There is a reason why delivery of everything is commonplace in Manhattan but novel in Madison. The more packages per stop a carrier picks up or drops off, the more profitable it is. The more distance between stops, the less profitable it is. As the American landscape densifies, delivery of more and more goods makes financial sense. We are going from an era of people-going-to-goods to goods-going-to-people.
Is it chicken or egg? Is greater density enabled by delivery? Or is delivery enabled by greater density? It is difficult to pull apart the two, and in a way it does not matter. Millennials are pushing us towards both. They don’t just long for a more European way of life, they are creating it.
Meredith Sandland, COO Kitchen United