Used to be, retirement and senior citizenship conjured images of sitting back with the grandkids on the front porch sipping lemonade, or sharing coffee with friends at the neighborhood senior center.
But today’s seniors include a large cohort of active adults age 55 and older who aren’t content staying put where they’ve spent the majority of their working and family-rearing years. Many want to downsize to multifamily living quarters but aren’t yet ready for assisted-living residences and continuing-care retirement communities (CCRCs). Indeed, more and more are still working at least part-time.
This trend represents a huge opportunity for developers, and one with plenty of room for growth. “There’s no large cadre of developers going after this segment,” says Elisabeth Borden, a seniors housing expert and principal with The Highland Group, a market research and development planning firm based in Boulder, Colo.
Borden has found in studying Denver’s metro market that age-restricted sites attain rents 50 percent to 75 percent higher on a per-square-foot basis than multifamily rentals of similar quality in similar locations. The reason, she says, is their greater perceived value to residents, since they generally offer more common-amenity space, concierge services, and activity/lifestyle programming.
A New Breed
The 55+ age group is big, and growing. Each year, 3.5 million Baby Boomers, those born between 1946 and 1964, turn 55. In its 2010 report, the U.S. Census Bureau found that there were 76.8 million people ages 55 and over and that this contingent earns an average median household income of $44,000.
Not surprisingly, no single housing prototype meets the diverse interests of this large group. As a result, savvy developers are offering a smorgasbord of options, according to Borden.
Borden has found that the most popular attributes these consumers look for in a development include location in a prime urban or suburban area; proximity to other age groups; and convenience of neighborhood amenities such as restaurants, libraries, and culture. Those 55 and older also like cost-effective on-site amenities, such as fitness and community rooms, as well as à la carte health-care options, often from third-party providers.
Certain geographic markets offer greater promise for this housing segment than others, says senior expert George Yedinak, founder of Senior Housing News, an online publication. Among those he cites are the I-95 corridor from the mid-Atlantic through the Carolinas; the Chicago metro; Texas; the front range of Denver; and warm-weather states Florida, Arizona, and California.
Understandably, this demographic’s age range and the variety of options they want make it difficult to give this group a name. Borden refers to them as “55+” or “age-restricted rental and for-sale” and eschews the “senior” label, which, she says, doesn’t resonate well with those under 80.
Homeowners at Seashore Point, in Provincetown, Mass., on Cape Cod represent a prime example of the growing younger “older” population who wants to live well and independently. The 43 units at the adult, concierge-style community sell for $365,000 for a one-bedroom and $560,000 for a two-bedroom. On-site amenities include a fitness center, community room, library, and restaurant.
Amenity-Rich Locations Are Key
In suburban Philadelphia, architectural firm Barton Partners has helped developers zero in on the 55+ niche with another type of product—high-end townhouses and luxury rentals in prime locations.
BET Investments in Horsham, Pa., hired Barton to design 192 rental apartments at Dublin Terrace in Dresher, Pa., 16 miles from downtown Philadelphia. The complex of a dozen four-story buildings with parking was designed for those 55+ seeking maintenance-free, sociable living after relocating from luxurious single-family homes. The average age of its renters has been in the 60s since the development opened two years ago. Rents for a one-bedroom with den start at $2,000.
Out West, Colorado had one of the highest growth rates (51.8 percent) in the country among the 55+ population from 2000 to 2010. In Littleton, a Denver suburb, the 217-unit Concordia on the Lake includes one- and two-bedroom apartments that opened in 2001, followed by larger cottages in 2008. All were targeted at the 55+ age group, though the average age of residents is actually 82. One-bedrooms at Concordia start at $1,330 a month; two-bedrooms, at $1,770.
Part of the development’s appeal lies in its proximity to theaters, restaurants, museums, and parks, not to mention its location across from a medical facility. On-site amenities are limited, but a wide choice of on- and off-site activities is offered.
In Denver proper, developer Henry Burgwyn is constructing two 100-unit rental buildings to help fill what he saw as a void for quality independent, market-rate rental housing for the active 62- to 75-year-old age group. Choosing prime, amenity-rich locations, again, was key for the two properties: University Hills Senior Residences, located five miles southeast of the core downtown, and 5280 Senior Residences, situated directly downtown. The buildings’ pluses include secure underground parking. Rents range from about $1,300 for an 850-square-foot one-bedroom to $1,800 for a 1,300-square-foot two-bedroom. Both communities will be completed within the next two years.
Because of the newness of the niche, Senior Housing News’s Yedinak expects its trends to evolve further. Among his crystal-ball visions are a need for more rentals than condos, because consumers are eager to keep a handle on fixed costs, and a desire for more smaller units, reflecting the scaling back seen in single-family housing, yet with greater customization and higher-end materials.
Yedinak also envisions more medium-size to large projects, as a way for developers to pare their financing risks, and more product differentiation, as two sets of occupants emerge—those ages 55 to 80 and those over 80, who may require more health care than other age groups.
With the 55+ age sector only continuing to grow, the opportunities for developers to serve these consumers truly seem boundless.
Barbara Ballinger is a freelance writer specializing in design and real estate.