For the next few weeks, Senior Housing News will take a more in-depth look at our list of Top Development Locations for 2013. Here is the first; please note the articles will be in no particular order.
Senior housing developers might find a new construction sweet spot in the Carolinas in 2013, if favorable demographics, lower barriers to entry, and growing consumer preference are any indication.
The Carolinas are two states with fairly healthy economic conditions and good demand, according to Charles Bissell, MAI, of Integra Realty Resources’ Seniors Housing & Health Care Specialty Practice.
“We’re hearing a lot of developers talking about projects in the Winston-Salem, Raleigh-Durham, and Charlotte metro areas,” he says.
Neither North nor South Carolina are covered by the National Investment Center for the Seniors Housing & Care Industry’s market area profiles (NIC MAP) for construction versus inventory data, which ranks at 1.99% for MAP31 (the top 31 market area profiles) as of the third quarter of 2012.
However, while lacking in senior housing construction starts data, the Southern region ranked second for most households within a set of baselines that are likely to move in the near future, says Margaret Wylde, president and founder of market research firm ProMatura Group.
In a survey of households between the ages of 55 and 74 with incomes of $50,000 or above and home values of $75,000 and above, 27.1% said they were “very likely” to move soon, and that could include moving into a senior living community.
The two states have 65+ populations either near or above the national average of 13.3%, at 13.2% for North Carolina and 14.1% for South Carolina as of 2011, according to U.S. census data.
Developers are trending toward lower-barrier Southern markets, agree Phil Downey and Larry Rouvelas of Senior Housing Analytics.
Three South Carolina cities—Aiken, Myrtle Beach, and Clemson—ranked on TopRetirements.com’s list of the 20 most affordable places to retire, using criteria including a housing price of less than $200,000; a high culture rating; and a low tax burden.
Meanwhile, SmartMoney.com named North Carolina as an optimal place to retire in 2011 for its living costs that are 6% lower than the national average, with New Bern and Asheville listed as affordable locales. And while the cost of living in retirement-friendly South Carolina cities Bluffton and Charleston is slightly higher than the national average, the state’s low taxes are considered a major plus for retiring seniors.
Although the states may rank well for retirees, North Carolina is one of just five states regulated by certificates of need (CON) for assisted living and residential care communities. While that does make it more difficult for senior housing developers, it isn’t altogether barring new inventory.
“The operators who do have those CONs continue to build out their pipeline,” says Daryl McCombs, investment advisor for ARA National Seniors Housing Group out of Tampa, Fla. He says his firm is seeing some activity—albeit limited—up the Atlantic coast into the northeast.
Despite the CON issue in North Carolina, both states have development potential.
“Even though Florida is known as the sunshine state, a lot of retirees from the northeast are stopping in the Carolinas because they don’t want to give up the change of seasons or the occasional dusting of snow,” says McCombs. “North and South Carolina along with Tennessee still get pretty warm in the summer, but it’s not the heat and humidity of a Florida summer or the snow and ice of a northeastern winter.”
Developers are noticing the same trend.
“We’ve seen the Southeast, including the Carolinas, become very desirable,” says Deborah Meyer, senior vice president of PulteGroup, the parent company of the active adult community brand Del Webb, in reference to a survey on baby boomer’s retirement preferences. “There’s been a shift a little bit away from Florida and Arizona, and North and South Carolina have moved significantly up on the list.”
Written by Alyssa Gerace