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A New Concept in Retirement Housing Gains Favor

The “real” independent living community is the new kid on the block, and so far the signs are that this new concept may have a bright future.

Excluding active adult housing, market-rate seniors housing has consisted mainly of two service-enriched products: congregate housing and continuing care retirement communities. They often position themselves as independent living communities, but they usually are more “semi-independent” by offering meals, housekeeping, transportation and access to a variety of supportive services that often include assisted living and skilled nursing care on site. Total monthly fees in these communities are often more than double the rents in conventional apartments with no services.

The new independent living prototype does not provide supportive services and is closer in concept to an active adult community. But unlike active adult communities — which are usually very large, for-sale properties that target couples and are anchored by an extensive recreation amenity package — these new, independent communities are usually smaller, infill rental properties whose market is predominately older singles rather than couples.

In fact, in terms of appearance and design, these communities tend to be tax-credit clones, which is not surprising since the developers and owners have tended to be tax-credit developers.

These new, market-rate, tax-credit clones have met with success in initial lease-up and marketing for two reasons: price and value.

If independent, senior living properties can be positioned in the market so that their rents are no higher than 10% above rents on new conventional multifamily buildings, then you have a real winner.

There are plenty of middle-income seniors who want to downsize and who like the idea of living in a secure building and being part of a community of seniors. But they have been put off by supportive service options, because they do not want to pay for something they do not believe they need.

Sales and marketing professionals hear the familiar “I’m not ready yet” refrain from potential customers all the time. They may hear a different response if they provide those customers with the opportunity to move into a new seniors community at the same price as a new conventional apartment.

Many elderly want to move into a seniors building with its own community room, fitness center and activity and program areas. And experience to date indicates there is pent-up demand for this new independent living product from a specific, but largely untapped, segment of the seniors market.

The key to success is making the product price-competitive with comparable conventional apartments, not with service-enriched seniors housing. There may be a small premium associated with this new product, but seniors will be reluctant to move into units that are significantly more expensive than conventional new rental housing.

These new communities have become feasible in market areas where rents for new, conventional apartments are now high enough that the numbers work for the new seniors independent living product.

If you can get control of a good site in a market where this is true, you may want to consider this exciting, new housing option.

Michael Kivov is the director of feasibility and strategic services for PMD Advisory Services, LLC, a Silver Spring, MD-based company that provides a range of consulting services and data products to the retirement and affordable housing industry. Kivov’s department specializes in market and financial feasibility, strategic planning and positioning, asset and portfolio assessment and related services. Kivov is an active member of the NAHB Seniors Housing Council and a speaker at Building for Boomers & Beyond: Seniors Housing Symposium in 2003. He can be reached at 301-565-5983 or by e-mail.

For more information about seniors housing, visit www.nahb.org/seniors or e-mail Jeff Jenkins or call him at 800-368-5242 x8292.

Enter Your Design in Seniors Housing Awards Competition

If you have an innovative design for active adult and seniors communities, enter the 2004 Best of Seniors Housing Design Awards competition. Click here to view the call for entries brochure, or e-mail Eucklan Matthews or call 800-368-5242 x8220. The deadline for entries is Nov. 13.

Learn More About Seniors Housing Through the Seniors Housing Council

To learn more about seniors housing or boomers, join the NAHB Seniors Housing Council. The council provides information, education, networking and recognition opportunities for its members and represents NAHB on seniors housing issues. For more details, e-mail Jeff Jenkins or call him at 800-368-5242 x8292.

BuilderBooks.com Has Publications About Seniors Housing

BuilderBooks.com offers a variety of publications about the seniors housing market. To view or purchase these publications, click here and type “seniors” in the search engine.

2004 Seniors Housing Symposium

To learn more about the seniors housing market, plan to attend the 2004 Seniors Housing Symposium, Building for Boomers & Beyond: It's All About Lifestyle in Chicago from April 14-16, 2004. The symposium will focus on the lifestyle component of 50+ seniors housing.

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