While incorporating commercial space into senior housing projects presents a value-add for the surrounding community, this type of mixed-use development can also be a win-win for providers, investors and active residents with high expectations for amenities.
It’s especially true for the oncoming wave of Baby Boomers who will be moving into senior housing in the coming decades.
Whether its locating a project adjacent to specialty retail centers or reserving space for a ground-level coffee shop, senior housing developers are realizing the added benefits mixed-use developments play in not only attracting residents, but also enhancing community relations.
“Senior housing within the context of mixed use development is a win-win for consumer, operator and investor,” says Mel Gamzon, president of Senior Housing Global Advisors (SHGA).
Headquartered in Miami, Florida, SHGA provides international real estate investment advisory services for owners, operators and investors within the senior living industry. Having worked with the concept of mixed-use development for many years, Gamzon views mixed-use as a strong component of senior housing, especially given the demands of an aging population.
“Mixed-use is a benefit to senior housing developers and investors, in that the coming generation of Baby Boomers are used to experiencing mixed-use environments,” Gamzon says. “The consumer benefits and ultimately the investor benefits by the diversity of products and services available to this population.”
This can be achieved, he says, by building senior housing adjacent to specialty retail centers or making the planned project complimentary with commercial recreation such as movie theaters, for example.
“Senior housing that becomes a component of commercial and residential mixed-use is an absolute value-add for the investor or developer, as well as the commercial property interest,” says Gamzon.
The question then becomes how does a senior living provider blend two real estate platforms and have the commercial space be accretive to the project itself? For Redmond, Washington-based Aegis Living, the answer was creating a new, branded product that would help make the building a neighborhood hub.
The company created a proprietary coffee shop called the Queen Bee Cafe as a way to mix retail with the assisted living and memory care for its Aegis on Madison assisted living community. The name derives from Aegis founder Dwayne Clark’s mother, who earned the nickname “Queen Bee” while living in one of Aegis’ communities.
Located in Seattle’s Capitol Hill neighborhood, Aegis on Madison sits within the city’s densely populated urban area that plays home to numerous restaurants, museums, nightlife, churches and the area’s Group Health Hospital campus. The area is also a growing workplace and home to many of Seattle’s high-income earners, according to data from online real estate database Zillow.
While Aegis on Madison isn’t scheduled to open until January 2014, the idea is that 100% of the profits from the Queen Bee cafe will be donated back to the neighboring community, says Dave Eskenazy, chief financial officer for Aegis Living.
“The long-term idea is to create a model that is profitable, but to turn those profits over to charities, like a local food bank or other nonprofit organization,” says Eskenazy. “It gives us another opportunity to become part of the community.
The commercial space also provides Aegis with a marketing opportunity to reach prospective residents.
“Assisted living is really an outreach within a 3-mile radius, in trying to draw in a customer base within that 3-mile range,” says Eskenazy. “Having something like the Queen Bee is a good way to connect the neighborhood to our business. It allows us to meet the families of prospective residents and for them to meet us.”
Aegis currently has two senior housing projects in its pipeline about to start construction on Queen Anne Hill, which overlooks downtown Seattle. Both of these communities will feature Queen Bee Cafes, says Eskenazy.
Aegis on Madison is the company’s 30th senior living community. It currently operates 14 communities in the Seattle area, five in Southern California, one in Las Vegas and the balance spread out among the San Francisco Bay Area.
The company is also in the works of developing a Queen Bee food truck for its communities that don’t have the proprietary cafe.
“Senior housing is as much a part of city planning as anything else,” says Eskenazy. “We have an aging population that wants to have an enjoyable place to live, but what makes it enjoyable is what’s outside of a resident’s room, what’s around it and a couple of blocks away.”
While mixed-use features can help to improve a senior living developer’s relationship with the broader community, this type of development has to be done right, says Kasey Burke, executive vice president for Meta Housing, a company that develops affordable senior housing in Southern California.
“Mixed use can make a lot of sense. I have seen it make sense, and I’ve seen it go horribly wrong. When it makes sense is when the ground floor is filled with retail and commercial that people want,” says Burke. “Where I’ve seen it go wrong is when you have to fill the space, but it’s not large enough to create a whole environment and momentum.”
Written by Jason Oliva