CHICAGO, IL—With the overbuilding of senior housing and low occupancy levels, developers are now readjusting their expectations as they respond to sagging demand from older generations. There are ramifications for this in both the short and long term.
First, US demographic trends going into 2020 indicate that senior housing occupancy levels still won’t be strong because absorption of these units isn’t happening fast enough.
“Seniors used to move into senior housing in their 70’s and now they aren’t moving until into their 80’s. So developers need to be astute to that,” says Laura Dietzel, partner and real estate senior analyst at RSM, an audit, tax and consulting services firm, tells GlobeSt.com. “Due to current technology which an adult child can use to monitor the day-to-day life of their elderly parents, developers certainly have a problem in the short term.”
In the long term, however, while technology can keep seniors in their homes longer, it is still a poor substitute for personal, human interaction. Developers and operators can create communities where seniors will go to belong, not only to stay safe or remain healthy.
“Mentally, seniors tend to age faster in an old person’s home. They don’t want to live in “graveyard-ish” communities and are increasingly seeking places where they can live near families and their kids but also have access to senior-exclusive activities,” explains Dietzel.
Provide Opportunities to Age-in-Place
Keeping the aging tenant in mind, developers can construct new units with larger bathrooms, easy-open windows and single story floor plan layouts which can help seniors stay in their housing longer.
“Builders are making homes easier to accommodate wheelchairs, lower counters, etc. Allowing that flexibility to families is very important and becoming very popular,” says Dietzel.
Through a master planned community, which accommodates senior housing, seniors are able to not only be near their families but also attend senior road trips and various senior-centric activities. Developers are constantly seeking ways to capture that aging, independent demographic, Dietzel says.
With development costs sky high and land construction and labor costs also high, it is a challenge for developers to construct senior housing.
Some are finding more efficient ways for senior housing build-outs including modular construction where the housing is assembled in a factory and then transported to a site.
“With modular construction, there is no weather/safety variability which helps to expedite the construction,” says Dietzel. “Some hotels and box structures are using this construction method.”
Seniors typically finance their senior living expenses by selling their assets. As they try to determine their next steps, it’s increasingly hard to offload their luxury or upper middle class homes to downsize to something smaller due to the urbanization of millennials.
“Millennials are renting longer and are delaying their life milestones while still living in cities,” observes Dietzel. “As a result, seniors are seriously encountering a number of obstacles as they try to sell their assets to move into senior housing.”