Shifting Landscape of Consumer Spending and What it Means for Real Estate

Last week we spoke a bit about how aging millennials are changing the way retail trade takes place.  This week, we see further evidence of this trend at American Express. 

Stephen Squeri, chairman and chief executive at Amex, said in a letter to shareholders.  “Millennial and Gen Z customers, who are our fastest-growing customer cohort in terms of both new account acquisitions and card spending, comprised over 60% of our new consumer proprietary accounts globally”.  He went on to say that 75% of the cards opened by younger adults are in their higher end luxury gold and platinum classes.  We believe this is important to note because it shows that the younger consumer has moved from the poverty stage after college, to become a more meaningful driver of economic growth.  

For a long time, it seemed like Millennials were stuck with low paying jobs and high levels of student debt, but that period has rolled over and it is resulting in continued growth in e-commerce and logistics.  After lapping huge comps earlier in the year, the logistics players are starting to take advantage of this trend.  As evidence, we’d point to the large earnings beat and increased guidance at FedEx last week.  

For Real Estate investors, demographic changes in consumer activity are a great indicator for where there will be job growth.  We look at logistics hubs and experiential retail as drivers of economic activity and that activity will drive population trends over time.  Today as we look to the future, e-commerce has a massive runway, and we will look to the places where businesses require human capital for investment opportunities.

Source: Wall Street Journal