For years now, we at the AgingOptions Blog have been wondering when the senior housing industry is finally going to wake up to the opportunity afforded by millions of aging baby boomers. While many prefer to age in place, there are also plenty of active retirees in their 60s and 70s for whom the traditional “retirement community” options just don’t cut it. These boomers have always had it their way, so to speak, and that’s still their attitude, especially when it comes to their senior housing choices.
For that reason, this recent New York Times article caught our eye. Written by reporter Linda Baker, the article highlights a wide range of new options in senior housing just now coming onto the market after some COVID-triggered delays. We couldn’t help noticing that most of the developments featured in the New York Times piece are pretty high-end – but still it seems clear that developers are rushing to meet escalating demand for all sort of senior housing options. It’s just like the baby boomers to demand new choices! (Please note that a subscription is required to access the New York Times article.)
The Senior Housing Market is Rebounding and Adapting
A few years ago, the Times article suggests, things weren’t so rosy for senior housing developers and operators. “The pandemic crushed the senior housing market, cutting occupancy rates and stalling construction,” writes Baker. But how things have changed! “Now,” she adds, “as the market begins an uneven rebound, developers are adapting to the coming wave of aging baby boomers with a new crop of living developments.”
Baker notes that, while specialized senior housing has been around for decades, “shifting demographics are forcing the industry to diversify more rapidly across rates and services.” For the well-to-do, that means an array of “increasingly lavish residences” from which to choose. But it’s not just rich seniors who are benefitting: a growing number of affordable housing models are coming to market targeted at the rest of us.
Baker cites a few specific examples of high-end projects in major cities, such as the Trillium high-rise near Washington, D.C., with “restaurants, a wellness spa, and other boutique-hotel-style amenities and finishes.” But farther down the income scale, a Boston-area project called Opus Newton will keep costs down by engaging resident volunteers. Some projects are for seniors only, while others like Kallimos Communities in Loveland, Colorado, are subsidized and multigenerational, with plenty of opportunities for dining and wellness programs.
“A Big Surge” of 65 Million Baby Boomers
As the saying goes, demographics don’t lie. Beth Mace, a senior housing expert, told the New York Times that the aging of more and more baby boomers (an estimated 65 million in total) is creating “a big surge.” But it’s not just growing demand that’s triggering a shift in emphasis.
“Other changes are reshaping housing, from pandemic-fueled safety concerns and labor shortages to trends favoring more personalized and community-based solutions,” writes Baker. As Beth Mace put it, “Everybody is trying to figure out the secret sauce — what the senior housing consumer wants. Bottom line: You’re going to see a lot of options.” As a result, says the article, “Developers are banking on the fact that if they build enough variety, they will be able to draw the next generation of aging Americans.”
New Options Reflect Customer Demands
According to the New York Times, the shift to a more consumer-driven senior housing market is something new. “We have to design communities that cater to what boomers want, and that’s a difference between senior housing today and housing developed 10 or 20 years ago,” developer Bobby Zeiller told reporter Baker. After focusing on suburban-style senior communities, the company Zeiller represents, Silverstone, is expanding into urban environments including Washington, D.C.
Occupancy rates in senior housing projects are improving, but slowly. “The average occupancy rate for the nation’s 31 largest senior housing markets was 81 percent in the first quarter of 2022, up from a low of 78 percent in the first quarter of 2021,” said Baker, quoting Beth Mace. But that still lags behind the pre-pandemic occupancy rate of 87 percent in 2020.
Senior Housing’s Biggest Competitor: Aging in Place
Baker writes that senior housing is still a niche market, even with the aging population. “Even before the pandemic, only about 11 percent of Americans over 75 lived in senior housing,” she writes. One reason: the “strong preferences for aging in place.”
But another obvious impediment is the price tag of senior housing. “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,” says the article. According to a survey by Genworth, the cost of assisted living in 2021 averaged $4,300 per month, and “the average monthly cost of memory care is $7,277, according to the National Investment Center.”
High-End Developers Count on the Luxury Market
The New York Times article describes several projects being developed around the country, but we’ll skip the details due to space constraints. But it does seem clear that those targeting the upper end of the economic scale are counting on robust demand.
“Developers of luxury projects are betting on larger units, sophisticated design and amenities, and a heightened focus on social engagement and active living,” says Baker. One new 208-unit development in San Francisco called Coterie Cathedral Hill features luxury dining and amenities including a wellness staff trained by the Mayo Clinic. “At Coterie Cathedral Hill, monthly rental rates range from $7,900 for a studio to $16,660 and up for two-bedroom residences,” says the New York Times.
But revived demand for housing choice will also benefit seniors with less lofty bank accounts. “A new spate of thrifty business models focuses on middle-income Americans,” says Baker. Some facilities will control staffing costs by engaging resident volunteers. Others are reducing the need for expensive in-house recreation facilities through partnerships with nearby community centers and health clubs.
But across the income spectrum, senior housing experts predict growing demand, especially as pandemic-triggered fears subside. “Coronavirus revealed a pandemic of loneliness and isolation,” one official told Baker. “Aging in place harms society by presenting the choice to live with others as a failure. We are creatures of community.” As another developer told Baker, the new options in senior housing are aimed, not at the elderly who have to move to a senior community, but at those who choose to.
Multi-Generational Developments Offer a Middle Way
Reporter Baker spoke with Bill Thomas, a co-founder of a firm called Kallimos Communities.
“The first Kallimos community, a partnership with the Loveland [Colorado] Housing Authority, is rooted in the idea that older Americans can be supported in homes designed for elder living in community-oriented mixed-age neighborhoods,” Baker explains. As Thomas told her, “The very best thing you can have for helping you stay independent is damn good neighbors.”
Thomas rejects the idea that the young and old should isolate from one another. “Young people and elders have been living together and supporting each other for many millennia,” he said. “The idea that we’ve wandered into a cul-de-sac of history where young people don’t see any merit in being around old people is just wrong.” Kallimos, according to their website, hopes to grow their multi-generational model into a nationwide movement. We’ll keep an eye on this and other developments in a continually changing kaleidoscope of senior housing choices.
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(originally reported at www.nytimes.com)