If retirement begins at 55, independent living is three decades late.
While independent living (IL) is loosely considered the start of the senior living care continuum, experts agree that most people are not entering IL until their 70s at the earliest, according to a new report from Senior Housing News.
One study pushes that figure out even further. In 2013, the American Seniors Housing Association (ASHA) and housing research firm ProMatura Group found that of 6,858 IL rental customers, only 6% were under the age of 75. Fifty-three percent of these IL customers were in their 80s, with two-thirds of all respondents entering IL after age 85.
“I think what [we’re] talking about now is a new, emerging housing option for people geared toward the 75+,” said Beth Mace, chief economist and director of outreach of the National Investment Center for Seniors Housing & Care (NIC).
The new report, “The New Active Adult Housing,” shows how the so-called “active adult” space is filling the housing gap for consumers between turning 55 and requiring independent living, thus creating a new space that might be called “independent living light.” Here are three aspects of this emerging housing model that traditional senior living providers should know as they attempt to thrive in a 55-plus world.
No one knows what active adult should be called
Active adult. 55-plus. 55 or better. Age-restricted. Age-qualified. Age-targeted. Service-enriched. Non-assisted. Active lifestyle. Lifestyle housing.
There are many names for the space perhaps best known as “active adult” or “55-plus.”
Just don’t call it “senior.”
“Put this on my tombstone: I will never buy something that says ‘This is for seniors,’” said Dan Hutson, chief strategy officer of HumanGood, a nonprofit senior living organization in Pleasanton, California.
Experts share his sentiment. The word “senior” is becoming anathema in housing for people older than 55. Removing that word only adds to the debate over what active adult is and how it differs from independent living. The term “active adult” remains popular in marketing materials and on provider websites, but insiders are trying to steer the industry away from the term.
“One reason [we don’t use ‘active adult’] is that we don’t think it’s clear what it is,” said Elisabeth Borden, principal at Boulder, Colorado-based The Highland Group, Inc. “We have clients who have affordable apartments who call them ‘active adult.’ There are people who sell mobile homes who call them ‘active adult.’ We don’t think it means anything.”
Among the replacement terms, “active lifestyle” is perhaps the most clear, accomplishing what “active adult” does not by placing the emphasis on “lifestyle” and hence declaring the consumer’s key motivation for moving.
“The terms are absolutely critical, because the 55-plus is probably the only legal exclusionary zoning that exists,” Paul Bessler, vice president of strategic market research for Scottsdale-based homebuilder Taylor Morrison, said. “It becomes very important what you call yourself—and ultimately who you attract.”
No one knows what active adult should be
The term isn’t the only element of active adult causing confusion. A great deal of ambiguity and debate exists around the definition of the product itself. Because of that, there is one easy way to think about active adult and its purpose within the market compared to the traditional independent living, assisted living, skilled nursing and memory care. And that is this:
Active adult is not care-continuum housing. It is lifestyle housing.
“‘Lifestyle’ is certainly a good way to phrase it,” said Manny Gonzalez, principal at Irvine, California-based KTGY Architecture + Planning. “[The communities are] about lifestyle and the social activities and what the community does to engage the residents.”
Active adult housing and independent living (IL) were, from the start, two different spaces. To this day, the popular opinion is that they are separate. Yet in the past three years, some major housing players have entered the active adult space to bridge the lifestyle-care gap and tap a massive market, potentially beating traditional senior living providers at their own game.
“[This is] a new, revitalized 75-plus traditional independent living type of property,” Mace said “There are a lot of developers that are going into this, quote, ‘active adult’ that are traditionally multifamily developers. What they are building is different than what the traditional, Del Webb 55-plus properties were.”
Because of this evolving space, seniors who want to move out of their homes and do not yet have advanced care needs now have more housing options than ever before. The amenities going into active adult communities combined with the improved health of seniors is delaying the IL move-in date and allowing providers who typically do not serve seniors to get a foothold into this consumer base.
IL providers can cooperate with active adult… or compete with it
The lack of a defined housing template for people older than 55 who do not yet need care services along with no consensus around the name makes the active adult space a potential wild west.
Colleen Ryan Mallon, chief marketing officer of Pennsylvania-based senior living management company The Kendal Corporation, believes that there are three reasons why traditional senior living providers would be well served to explore the active adult space. The first is the business opportunity. The second is that active adult communities can become a referral source for traditional senior living.
The third is most interesting: Mallon sees the new active adult as potentially part of the care continuum, en route to traditional IL.
“I see it really as another option as opposed to a competitor,” Mallon said. “Everyone loves choice, and some people don’t think they’re ever going to need care. So having an active adult, 55-plus community where they can have the maintenance benefits but not necessarily have health care on the campus or an insurance component, it’s just another choice. And I think choice is good.”
But there is one area where active adult could potentially disrupt the business of care-based senior living, even if senior living providers don’t want to enter active adult: land.
Dale Boyles, a former executive with Brookdale Senior Living (NYSE: BKD) who is now managing director of senior housing at Phoenix-based Alliance Residential Company, sees the possibility that traditional senior housing providers could get outbid for land by active adult providers, whose lower construction cost could allow them to spend more on land.
“When I look at a piece of dirt, we can look now at it three ways: traditional multifamily apartment, active adult or assisted living and memory care,” Boyles said. “We can then figure out what the highest and best use is for that particular site, and then be able to pull the trigger and go one of three ways, which I think puts us in a very unique situation.”
Indeed, Scottsdale-based homebuilder Shea Homes can build active adult for as low as $50 per square foot, while 2017 data from The Weitz Company and ASHA shows the lowest average cost to build IL at $141 per square foot.
“I think the 55-plus apartments definitely are going to take away from the traditional independent living package,” said Dr. Margaret Wylde, CEO of ProMatura Group, “mostly because it is going to be lower-cost.”
And that should get everyone’s attention.
Click here to access the complete report, which takes a deep dive into the new active adult, and reveals how traditional senior housing leaders are finding and creating new business in what for them was a previously unexplored space.
Written by Jack Silverstein
Companies featured in this article:
Alliance Residential Company, American Seniors Housing Association, Brookdale Senior Living, HumanGood, KTGY Architecture + Planning, National Investment Center for Seniors Housing & Care, NIC, ProMatura Group, Shea Homes, The Highland Group, The Kendal Corporation