A sign facing the freeway, plenty of parking and a big-box space are no longer the tried and true equation for success as developers begin looking at the wants and needs of two new generations of users, including a cohort whose oldest members are just getting their learners' permits now.

Developers need to understand what Generation Z office tenants want now, what Generation Alpha shoppers will want in a decade, and how projects fit into an evolving cultural landscape, panelists said at Bisnow’s Houston State of the Market event Thursday.

As the metropolitan area adds about 100,000 people per year and demographics change, residents need more services. But it takes more than it ever has to get people to leave their homes as two new generations come of age.

That means developers have to look at stores, offices, parking lots and other properties and design them differently.

“We're at a moment where there's a big tipping point on issues like parking,” Rebees Managing Partner Tom Paterson said at the event, held at 2150 Town Square Place in Sugar Land.

“We deal with long-term fixed assets in a rapidly changing world. This is one instance that requires some real forward thinking and creativity.”

Maximizing profit today may not pay off in the future, said Marc el-Khouri, Perkins & Will associate principal and practice leader. For instance, cars are already driving themselves. In 10 years, they may be capable of dropping riders off and going to park elsewhere, rendering some parking garages obsolete, he said.

“When we look at parking garages nowadays, we try to future-proof them and design them in ways that, in 10 years, they might be able to get reimagined and adapted to something that could be retail, could be sports facilities, could be vertical parks,” el-Khouri said.

That could mean extending ceiling heights in parking garages built now. It isn’t the cheapest way to build them, but it could pay off in the long run, el-Khouri said.

It is important that municipalities and zoning codes think ahead, Paterson said. Parking usually doesn’t generate revenue, but it is required by code, he said.

“I do think that you're seeing some cities, in a lot of instances, even taking the idea of going from minimums to maximums because the world is changing very quickly,” Paterson said. “Even in a place where there's no zoning … the developers will do what it takes to meet the minimum market expectation to get something leased.”

Developers must create projects that will drive sales for tenants in order to keep them in place long-term, NewQuest President Austin Alvis said. The developer typically considers how it can draw visitors to centers at different times, extending the daily shopping cycle, he said.

And to get people out and about, developers have to find out what the next generation is looking for, DC Partners President Arsean Maqami said.

“I was seeing that young people don’t go to nightclubs, and apparently they go to coffee shop raves,” Maqami said. “I’m like, ‘I don’t understand this at all. I have to figure out where these are and … how does this make money?’”

For younger people, it is very important to do things that people in other generations do, he said. That includes Gen Z, whose oldest members are approaching 30, and Generation Alpha, whose members were born between 2010 and 2024, meaning the oldest of Gen Alpha will be 15 this year.

“It's important for all of us, for this industry to keep thriving, [to figure out] what's that next consumer base, that next generation,” Maqami said. “What do they want? What are they desiring? Because then that’s going to drive the yields.”

Focusing on the end user as well as tenants and their experiences instead of outdated issues like parking sets a development up for long-term success, Scarlet Capital co-founder and Managing Partner Daniel Ron said.

Scarlet won deals for developments in East Downtown and Downtown because it was willing to initiate them without having plans for parking upfront, he said. They later worked out parking deals with surrounding businesses and property owners.

“That allowed us to move forward with the developments in areas where the market was going to solve for itself,” Ron said. “Houston didn't have parking requirements in those neighborhoods, which I think actually is great and allows for a lot of development.”

Trends come and go, and no one can see the future, panelists said. But given the certainty of change and evolving tastes, it is important to also design projects that will endure whatever comes their way.

Developers are competing for consumers' eyeballs, time and attention, Ron said.

“So what are you going to do that's going to keep people coming back time and time again?” Ron said. “For us, that's making things beautiful, that's keeping things clean, making people feel safe, going back to those core principles that are always going to be true.”