Senior housing could be in for a big surge—as much as double the current penetration rate—as baby boomers continue to sell their homes and move toward more amenities in urban centers across the country.
Many are seeing their retirements unfold in those urban centers and are seeking new and modern housing options rather than independent living communities that are beginning to experience obsolescence, write PwC and the Urban Land Institute in their Emerging Trends in Real Estate 2014 report.
Together, the organizations interviewed professionals in senior housing from investors and operators including Health Care REIT, CRL Senior Living and HCP Inc. to gather insight into the current market and the opportunities it offers.
“The national penetration rate of current seniors’ housing could double in the next 15 years from the current level of just 8 percent,” PwC quotes from one of its unnamed interviewees. “We will now see more development across the country. We have an aging population and a function obsolescence of older independent living facilities. The newer ones are more resort like,” one of the institutional real estate advisors said in the research.
Baby boomers are a major driver of real estate more generally, the report finds, in line with an overall shift toward urban dwellings.
“…the baby boomers also will drive change as they age; many will sell their homes and move to urban locations with similar amenities as those desired by gen Y (but with the added amenity of convenient health care),” according to PwC and the Urban Land Institute.
Second only to infill and in town housing, seniors/elderly housing presents the greatest investment prospect in 2014, the organizations find, surpassing all types of single family, student housing and affordable housing.
Prospects for Residential Property Types in 2014
PwC and the Urban Land Institute also pointed to specific development opportunities based on aging boomer preferences based on an interview with a CEO of a commercial real estate firm.
“…baby boomers are selling their houses to rent apartments within walking distance of downtown areas or moving into centers for active seniors,” the report states.
“There is a growing demand for projects that target residents who are 55 and older. They want high quality ‘walk scores’ and access to entertainment, amenities, and quality health care,” the CEO said.
Written by Elizabeth Ecker