It’s no secret that many senior living providers are having trouble attracting “middle market” residents, or people who make enough to support themselves in their own homes but can’t afford a typical community’s monthly fees.
But those people may find some relief in a different type of senior housing designed to cost a little less than the norm, according to a new white paper from Rockwood Pacific, a California-based real estate services firm.
The concept, called “Apartments for Life,” (A4L) would offer less in terms of bundled services than an average independent living community, but would also amount to more than a simple age-restricted apartment complex. And it could work in nearly every metropolitan market.
Solving the affordability problem
Even as new senior housing construction continues to boom in some markets, many older adults are struggling to pay for the costly service. That stark reality has put affordability at the forefront of many operators’ minds.
As outlined in the paper, an A4L would have aging-friendly design elements and access to concierge resources for offsite services, but would lack more expensive bundled independent living features like a commercial kitchen or a regimented meal plan.
In theory, nixing some of the traditional senior living services would help keep monthly rents down while still allowing for the kind of shared social experiences that many independent living residents covet. Residents might still choose to participate in outings or the occasional onsite group meal, for example, but they wouldn’t be required to sign up to foot the bill for everyone else.
“Community is really the key value proposition,” Rockwood Pacific Principal Frank Rockwood tells Senior Housing News. “Apartments for Life is about delivering on community but in a lower-cost setting.”
The A4L concept isn’t designed to replace independent living, Rockwood says. Instead, the new property type is meant to supplement the existing market.
“There’s certainly going to be people who say, hey, I want the three meals a day, I want the traditional model,” Rockwood says. “But there’s a subsegment, especially the ones that are struggling with affordability of what the traditional independent living segment serves up, that is going to see this as an alternative.”
What operators stand to gain
Though the property type could potentially work well in nearly any metropolitan area in the U.S., the concept is especially promising for places where the gap between average monthly apartment rents and senior living fees is wide.
For example, in St. Louis, Missouri, an independent living community charges its residents about $3,000 per month on average, according to NIC Map data. On the other hand, the average monthly rent for a multi-family housing unit is about $1,100, according to the Zillow Rent Index.
An A4L operator could offer a compelling value alternative that falls somewhere between the two price points, Rockwood says.
For senior housing operators, another potential upside to running or owning an A4L could be less risks related to health care regulations and liability. Staffing woes — including finding workers and paying employees — would also be lessened in these kinds of communities.
Multifamily executives could also find something to like in the model. Companies that traditionally develop or manage apartment buildings would likely find in A4Ls increased rental rates, lower turn-over rates for units and lower deterioration of rents and occupancy rates during downturns.
Still, senior living operators that already run independent living communities are probably the best suited to find a “secret sauce” in the property type, Rockwood says.
Though the A4L is far from industry-wide adoption, Rockwood says he sees signs that the idea could take off with operators or developers in the next five to 10 years.
“I think you’re going to see more of it, but it’s going to be hard to get the mix just right,” he says. “You can certainly talk yourself out of it, but you could have talked yourself out of assisted living 25 years ago.”
Written by Tim Regan
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