The main premise of the third chapter of Jones Lang LaSalle’s Retail 2020 research programme is that demographic change will be a major operational challenge for retail property in the decade to come. By 2020, the size of Europe’s population will not grow –0.0% change according to the UN– but its composition will be altered dramatically: there will be some 30 million fewer people under the age of 54 and an equal rise in the gang above that age.
In addition, the gains in house prices, equities and wage growth which have benefited the now-retiring generation will not be as dramatic for Generations X and Y, meaning that more wealth will be concentrated in an older, larger age group. The types of products available and the way they are marketed will all need to change to appeal to this spending group – even though older generations are traditionally savers. Simply put: there will be fewer, less wealthy young people around to spend.
With respect to the UK, if the ONS’ assumptions around mortality, health and fertility are correct then by 2031 the UK’s population could reach 71 million by 2031, circa10 million more than today. The mean age will have increased 3 years to 42.6 and the numbers in the oldest age bands will rise fastest, a whopping 76% increase in the numbers of people aged 75 plus, over 25 years.
As we argue in Retail 2020, there will be winners and losers in this retail race. We are not advocates of the “end of the shopping mall” or the “death of the out of town park” but we are heralds of the demise of any shopping experience which caters purely to the young disposable income bracket. There will also be winners and losers in the provision of real estate more generally, with retirement ages rising or indeed being scrapped altogether offices and workplaces will need to cater to the ageing worker. Today large shopping centres and retail parks are often anchored by bowling alleys, tomorrow will it be health care facilities?!
In the real estate future, ‘grey money’, the ‘grey worker’ and the ‘grey health provider’ will be where it’s at, much more so than has been the case in the past!