Minnesota’s Senior Housing Surge Stirs Overheating Concerns

As municipalities outside of Minneapolis’ Twin Cities metro area amend local zoning requirements to make way for more senior housing development, senior living providers are faced with the rising challenge of developing in a market that is reaching saturation. 

In the third quarter of 2013, the Minneapolis metro saw a total of 1,072 new assisted living units under construction, as well as 260 independent living and 261 nursing care units, according to data provided to SHN from the National Investment Center for the Seniors Housing & Care Industry (NIC). The only other metro that came close to Minneapolis in terms of construction activity was Houston, with 1,071 units, respectively.

Previous NIC data from the second quarter of 2013 supported the anticipated inventory growth, as this quarter saw six new properties opened within the past year, adding 461 units to a city that doesn’t even make the top-10 list of largest U.S. metros by population. In 2010, the population of the Minneapolis-St. Paul metro area counted approximately 3.3 million people, according to the U.S. Census Bureau.

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The second quarter also saw seven new senior housing properties under construction in the Minneapolis metro, with another six properties undergoing expansions, which NIC expected would add 757 and 200 units to the area’s growing inventory.

But as bullish as developers have been in Minnesota, some say the area is getting to the point where some locations are becoming saturated by senior housing projects, says Julie Murray, vice president of sales, marketing and new ventures with senior living owner/operator Ecumen.

“Availability for sites is decreasing, at least for the near term,” Murray says.

A Minnesota nonprofit organization based in Shorewood, Ecumen owns and operates independent living, assisted living, memory care, skilled nursing and transitional care facilities within its home state, as well as in Michigan, Wisconsin, Nebraska, North Dakota, Tennessee and Idaho. The company, with more than 150 years into its existence, ranked No. 18 on the LeadingAge-Ziegler 100 released in September with 40 communities comprising 2,545 total units as of December 31, 2012.

Ecumen serves primarily four to five suburban locations within Minnesota, but while there is still opportunity for development in the state, it largely depends upon the product types developers are looking to build, Murray says.

“There are pockets of opportunity, but we’re still looking at a five to seven year lull before we really see Boomers utilizing assisted living or memory care product types,” Murray says. “There’s also opportunity for independent housing that focuses on younger seniors, however it’s dependent on the area.”

While climate appeal might not attract retirees to the Twin Cities as it does for other construction hotbeds like Arizona or Texas, Minnesota’s aging population has been stoking senior housing development growth in markets across the state.

Increased interest from senior housing developers has led Lakeville, a city 23 miles south of downtown Minneapolis, to change its zoning code to allow more assisted living and memory care units to be built, the local Star Tribune reported last week. While the zoning amendments don’t apply to independent living senior housing complexes, the new rules intend to free up a considerable amount of territory in Lakeville that was previously off-limits to assisted living and memory care centers.

Minnetonka-based Waters Senior Living is also seeking a rezoning approval to develop a $21 million assisted living and memory care community in the Highland Park neighborhood of St. Paul, reports Twin Cities.com.

In central Minnesota, a recent housing study conducted in St. Cloud—approximately 70 miles northwest of the Minneapolis-St. Paul area—showed there is a shortage of senior housing in the city, especially given the area’s age 55 to 64 population has grown 73% from 2000-2010, according to the St. Cloud Community Housing Study.

Of the types of senior housing needed in St. Cloud, independent living, assisted living and nursing homes were of top concern, the study noted.

“Demographic trends seen in the City of St. Cloud reflect the larger demographic trends seen throughout the United States, with the older population expanding rapidly and wishing to be located closer to medical and related services,” the study states. “Consequently, shortages of homes designed for the elderly, especially aging-in-place options are desired.”

A development pipeline that is actively anticipating Minnesota’s growing aging population has induced concerns that the state may be approaching over-building territory when it comes to senior housing.

“There’s always a concern that the market can get overbuilt,” says Murray. “Providers should be aware to build the appropriate amount for the market as it demands today, but they also have to make sure they can fill the community. The saying ‘whoever gets into the dirt first’ is not necessarily true.”

Written by Jason Oliva

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