With private senior housing concepts often geared toward the high end consumer, a question has remained among senior living developers and operators as to meeting the needs of the less-affluent consumer who might not be able to afford the rising costs of today’s senior living monthly rents.
One Texas developer has begun a foray into this new market and sees huge potential for the population seeking a slightly modified, more affordable senior living alternative.
“There is a large underserved market that still needs a product, but what we were providing was too expensive,” says James Gray, Bridgewood Property Company president.
The company had built historically for the high-end consumer until it acquired a portfolio of properties three years ago that served a different price point. The company took those 1,000 units and created a prototype for the new model, which it will reproduce in the coming months and years.
Brigewood is eyeing the new niche as a new opportunity with plans to develop two middle-price point communities this year, with the first located south of Austin comprising 80% independent living and 20% assisted living at a price point that is roughly $1,500 per month less in rent than in Bridgewood’s other properties.
“Residents get more features with the higher price, but the lower price will works well, we think,” Gray says.
The differentiators mainly fall into design options, though some amenities are slightly more limited as well. The units in the new property will have slightly smaller kitchens, a little less square footage and fewer unit options. They won’t have crown moulding or granite countertops, and the buildings will be one story rather than multi-story, making them better fit for suburban sites that are more sprawling.
The development costs are lower at around $90 per square foot for the middle price point product versus a multi-story project cost of around $140 per square foot, according to Bridgewood.
Cost savings can also be passed on to the resident through services, Gray says.
“Another price point consideration comes from services such as dining,” he says. “In the higher end property we might have three to five entree options. In the middle price point, there are one to two. The variety is not as great.”
But those savings can be substantial for the resident who sees rent ranging from $2,495 to $3,295 per month versus $3,500 to $5,500 in the higher end communities where Bridgewood is operating currently.
The company has had no trouble with financing for the properties, or gaining appeal from consumers. However, the sales approach does have some distinctions.
“The basic sell is the same,” Gray says. “We are appealing to the same needs of shelter and food programs to make life easier. Beyond that, its a different pitch. With the high end we are selling a luxury lifestyle. With the middle price point we are selling carefree living.”
The demand has led Bridgewood to plan for more construction in the coming year, during which it plans to add two to three communities to its existing 15-property portfolio. It has found the middle-priced market has more opportunity in many cases than the high-end options.
“There are limited opportunities in the high-end market to find urban sites, but there’s almost an infinite supply in the middle price point as long as you find the right market,” Gray says.
Written by Elizabeth Ecker