_Time marches on - The U.S. population continues to grow older

Looking at Census Bureau data by 10-year age bands, the biggest spike over the next 10 years will occur among those aged 70 to 79, with the older half of the baby boom generation, now in their 60s, aging into their 70s. As shown in the chart below, the 70 – 79 age group will add 10.9 million people by 2026 (the left axis), an increase of 54% from the current number of people in their 70s (the right axis). The younger half of the boomer generation, now mostly in their 50s, will pile into their 60s by 2026, expanding this age group by 4.8 million, a gain of 13%. By comparison, the total U.S. population will grow by 8%, or 25.8 million, by 2026.

Millennials—those born between 1982 and 2004, as defined by authors Neil Howe and William Strauss—are having a demographic impact as well. In the next 10 years, the leading edge of millennials will move into their 40s, adding 2.9 million to this age group by 2026, while the bulk of millennials will move into their 30s, adding 5.6 million.

Only two of the 10-year age groups will lose population between 2016 and 2026. The number of people in their 50s will decline by 3.8 million, the result of lower birth rates in the second half of the 1960s and 1970s. Also, the number of people in their 20s will decline by a modest 200,000.

Centenarians, who are 100 or more years old, are a small group, numbering around 73,000 in 2016. But in terms of percent growth, they will see the largest jump in their numbers by 2026, an increase of 68% to a total of 123,000. They owe their longevity to advances in health care, as once-fatal diseases have become treatable. The number of centenarians will really begin to grow when the leading edge of the boomer generation turns 100 in 2046, by which time they will benefit from further advances in care.

Impact on Commercial Real Estate

• The most obvious impact is the growing need for health care by an aging population, which—along with changing technology and improving treatment protocols—will create demand for all types of medical facilities, particularly those supporting outpatient care such as medical office buildings, clinics, surgery centers and repurposed retail space.
• Senior housing options will be in demand, offering a range of price points and medical care options, from 55-and-over lifestyle-oriented communities in desirable locations, to modest developments offering access to round-the-clock nursing care, and everything in between.
• The demand for educated and skilled workers will remain high, although it will wax and wane with economic cycles. The prime working age population (between 18 and 64) will grow slowly overall, increasing 3.3% over the next 10 years, down from 21.1% in the 1970s, when boomers were flooding the workforce, and 13.6% in the 1990s, when gen-Xers were interviewing for their first jobs. As a result, employers will continue to look for locations and types of facilities that will appeal to the talent they need to recruit.
• The baby boom generation was an anomaly, not just because of its size, but because it was generated by a spike in the birthrate that was bookended by periods of lower birthrates. Although the U.S. population will continue to grow overall (assuming immigration is not sharply curtailed), there is unlikely to be another generational spike like the baby boom. More even population growth in the future could result in slower expansions and shallower recessions. Suburban growth in particular could moderate, except in traditionally high-growth markets such as Phoenix and Charlotte, while developers seek opportunities to redevelop or repurpose space in cities and older suburbs.

Written by Robert Bach, Newmark Grubb Knight Frank, Director of Research – Americas.

Read previous U.S. market insights here