As baby boomers age, developers are exploring housing options for them
The pandemic has crushed the senior housing market, reducing occupancy rates and stalling construction. Now, as the market begins an uneven rebound, developers are adapting to the coming wave of aging baby boomers with a new generation of living developments.
Specialized housing for older Americans has been around for decades. But changing demographics are forcing the industry to diversify more rapidly between rates and services, producing increasingly lavish residences for high-income Americans as well as a growing number of affordable housing models.
For example, Trillium, a skyscraper under construction near Washington, offers restaurants, a wellness spa, and other boutique-style amenities and finishes. And in the Boston area, Opus Newton, a smaller development, will rely on resident volunteers to help keep costs down.
Developers are also experimenting with non-traditional models. In Loveland, Colorado, Kallimos Communities plans a multi-generational development featuring 100 subsidized rental units clustered around shared green space and offering dining, art and wellness opportunities.
The aging of more and more baby boomers (about 65 million in total) is creating “a strong push,” said Beth Mace, chief economist at the National Investment Center for Seniors Housing & Care, a data services provider for the elderly care industry. .
Other changes are reshaping housing, from pandemic-fueled safety issues and labor shortages to trends favoring more personalized and community-based solutions. Housing for older Americans offers three general options: independent living, for an active lifestyle; assisted living, which includes some medical care; and memory care. (Nursing homes provide nursing care and generally do not fall under the category of housing for the elderly.)
“Everyone is trying to find the secret sauce – what the consumer of senior housing wants,” Ms Mace said. “Bottom line: you’re going to see a lot of options.”
The developers are betting that if they build enough variety, they can attract the next generation of aging Americans.
“We need to design communities that meet the needs of baby boomers, and that’s a difference between seniors’ housing today and housing developed 10 or 20 years ago,” said Bobby Zeiller, vice president and co-general manager of Silverstone Senior Living, the developer behind the trill.
After focusing on suburban-style senior communities, Silverstone is expanding into urban environments, Zeiller said. The industry, he said, is “moving very quickly.”
The average occupancy rate for the nation’s 31 largest senior housing markets was 81% in the first quarter of 2022, down from a low of 78% in the first quarter of 2021, but below the pre-pandemic level of 87% in 2020, a said Ms. Mace. .
The numbers are starting to rise in some markets, according to data from the National Investment Center. In Miami, for example, construction as a share of inventory was 11% in the first quarter of 2022, the second highest level on record. But at the other end of the spectrum is Sacramento, where construction fell to about 1% from 17% in 2019.
Even before the pandemic, only about 11% of Americans over the age of 75 lived in retirement homes. The strong preference for aging in place is one of the reasons for the low rate.
The high cost of housing is another factor, especially for the eight million middle-income Americans who do not qualify for subsidies but cannot afford to pay out of pocket. The national median monthly rate for assisted living was $4,300 in 2021, according to a survey by Genworth, an insurance holding company. And the average monthly cost of memory care is $7,277, according to the National Investment Center.
Luxury project developers are betting on larger units, sophisticated design and amenities, and increased focus on social engagement and active living.
Coterie Cathedral Hill, a 208-unit development that opened in San Francisco in April, features five restaurants, an outdoor pool, and landscaped courtyards and terraces. Wellness staff receive training through the Mayo Clinic, and an onsite care coordinator helps residents achieve a wide range of mental, emotional, and physical health goals, including assistance with social and philanthropic goals.
A joint venture between property developer Related Companies and Atria Senior Living, one of the nation’s largest senior living providers, Coterie focuses on affluent city dwellers who seek “consistency between the lifestyle they were used to when they lived in a high-rise,” said Joanna Mansfield, general manager of Coterie Hudson Yards, a second development opening this fall in New York City.
At Coterie Cathedral Hill, monthly rental rates range from $7,900 for a studio apartment to $16,660+ for two-bedroom residences.
A new wave of thrifty business models is focusing on middle-income Americans. Opus Newton, for example, will require residents to volunteer 10 hours a week, giving them a stronger sense of purpose and community while “drastically reducing staff overhead,” Amy said. Schectman, president and CEO of 2Life Communities, a nonprofit organization developing the project.
Other cost savings include outsourcing care and offering discounted memberships to the nearby Jewish community center, eliminating the need for in-house recreation facilities.
Ms Schectman expressed her confidence in the future of congregate seniors’ residences, despite ongoing pandemic concerns.
“Coronavirus has exposed a pandemic of loneliness and isolation,” she said. “Aging in place harms society by presenting the choice to live with others as a failure. We are creatures of the community.
Upfront costs for Opus Newton’s 174 units start at $391,000, a fee many residents will pay when selling their homes.
Repurposing existing buildings is key to solving the middle-market challenge, said Fee Stubblefield, general manager of The Springs Living, a developer in Portland, Oregon, with 18 properties serving seniors of all incomes.
The Springs Living has two luxury skyscrapers under construction, one on the Columbia River in Vancouver, Washington. Properties will include firewalls to seal off floors in the event of an outbreak, and they will be certified to meet new health and wellness design and operating standards.
Starting rents in new buildings range from $3,700 to $10,000 per month.
There are two types of senior living residents, Stubblefield said: those who want to live there and those who have to. Those who want to live in a seniors’ residence represent “a large part of our society”, he said. “The social and wellness component is underbuilt for this population.”
Labor shortages add to the economic challenges faced by developers of retirement homes. Employment in long-term care fell 6.7% from February 2020 to December 2021, according to a recent analysis data from the Bureau of Labor Statistics.
“Workforce stability is the single most important factor in the future of housing and services for older people,” Mr Stubblefield said, adding that operators have an “obligation” to create career paths for entry-level personnel supporting the industry.
Bill Thomas, co-founder of Kallimos Communities, offers another solution to the various challenges related to the future of aging and retirement in the United States. “The best thing you can have to help you stay independent is some damn good neighbors,” he said.
The first Kallimos Community, a partnership with the Loveland Housing Authority, is rooted in the idea that older Americans can be supported in homes designed for seniors living in mixed community-oriented neighborhoods.
“Young people and elders have lived together and supported each other for millennia,” Thomas said. “The idea that we have wandered into a cul-de-sac in history where young people see no merit in rubbing shoulders with old people is simply wrong.”