Why Millennials are Migrating to the Suburbs

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America’s shift to the urban core has grabbed headlines in recent months. The glamour of big-city lights and high-rise apartment living seemingly have captivated many demographics, especially millennials, and overshadowed the suburbs.

Away from the neon and glitter, the street lights in the ‘burbs are far from flickering. Submarkets close to city centers and farther away are catching the attention of many, including those same millennials who some expected would fill downtown pads yet have been priced out of the city core.

Inner-ring suburbs are becoming desirable areas for new college graduates and others who are climbing social and economic ladders. Many are seeing the value of live/work/play lifestyles synonymous with downtown living being incorporated into suburban settings.

Despite popular belief, the suburbs are growing

The heartbeat of the suburbs is beating strong with help from the millennials.

“The suburbs, contrary to conventional wisdom, are not dead,” National MultiFamily Housing Council President Doug Bibby said.

One reason, says NMHC President Doug Bibby, is that the urban core has become such a hot commodity that cap rates have “gone bonkers” and developable land is scarce. So some developers and investors are going elsewhere, including areas close to downtown where they can create the mixed-use, new urbanism communities that millennials desire.

“Developers are making good money from smart development in the close-in suburbs, and certainly there is plenty of capital out there for both debt and equity providers,” he said.

The lure for Millennials is lower rents and with an urban feel that includes connectivity to the city’s core.

“The inner ring suburb mimicking the urban core is happening all over,” Bibby said. “Here in the D.C. metro area, both Bethesda and Arlington/Ballston are mini urban areas where millennials work and play, and yet the suburbs are connected to the core via Metro (rail) and bus.”

Suburban market transforming with an urban feel

MPF Research Vice President Greg Willett notes that while movement to the urban core has gained attention, the suburbs continue to be well-entrenched in the apartment business. The numbers show that suburban properties comprise much of the existing stock in many metros, and new projects are popping up faster than in downtowns and near-downtown neighborhoods across the country. For example, eight of the top 10 busiest submarkets for apartment construction during the current cycle are largely in the ‘burbs.

The Dallas/Fort Worth market has been a national leader in suburban developments that take on the feel of urban-style properties, Willett said last fall at the Marcus & Millichap conference in Dallas. Modernized apartments in close proximity to restaurants, bars, shopping and transportation hubs but with lower rents are helping drive business.

“What we’re clearly seeing is that (millennials) like the suburbs in that urbanish-style product, as long as you have some hub that exists in the service center,” he said.

Humphreys & Partners Architects CEO Mark Humphreys recently said his company is “seeing a lot of movement” to the urban core fringe and suburbs because millennials coming out of college can’t afford high rents.

“They are living out on the edge or going out in the ‘burbs,” he said.

Lower costs luring Millennials to suburbs

Jennifer Staciokas, a senior vice president at Pinnacle Property Management Services, has seen a trend in younger renters being priced out of city centers or having to share apartments to make ends meet. Jobs in suburban markets are also luring millennials farther out.

“Millennials seem to like the communities in the suburbs that have an urban feel to them – shopping, restaurants, nightlife within walking distance to their apartment, and in many cases their jobs are also close by in the suburbs,” she said.

Staciokas said because cost is a factor, it stands to reason millennials would settle in the suburbs and live within their budgets. And it’s not like Millennials are contributing to large vacancies in the urban core because Baby Boomers are taking up the slack. Empty-Nesters are more likely to rent in urban locations, she said because they can afford the price of the apartments and are looking for the conveniences of downtown living.

“(Millennials) normally do not qualify on the front end, so they opt to move to a suburban environment within their budget,” she said, “or an up and coming area closer to the urban environment.”

The urban core’s loss, in that respect, is the gain of the suburban markets.

This article originally appeared on PropertyManagementInsider.com