Independent Living Innovation a Must as Competition Heats Up

As investors look toward independent living communities with growing interest, it’s important that senior living developers and providers position these projects to stand out from the competition.

Whether by taking a page from the hotel industry playbook or appealing to younger residents, independent living communities should be taking action to win market share—or they could find themselves hurting as occupancy starts to slip in this sector of senior living.

This was among the top takeaways during “The Current Landscape for Independent Living Development,” an April 26 webinar hosted by Senior Housing News. The webinar included advice and industry knowledge from experts at Solstice Senior Living, Perkins Eastman, Capitol Seniors Housing and the National Investment Center for Seniors Housing and Care (NIC).

Here are some of those experts’ insights:

Occupancy to deteriorate slightly 

Though what exactly constitutes independent living isn’t always clear, NIC defines it as rental properties that have communal dining; resident services such as laundry or housekeeping; some degree of social programming or activities; and little to no help with activities of daily living (ADLs).

What is clear, though, is that the property type has gained momentum in recent years, even as assisted living occupancy has trended downward, reaching a new all-time low of 85.7% during the first quarter of 2018. Though independent living occupancy also slipped during that time, it averaged a far better 90.3%.

Market metrics like stronger occupancy make independent living a potentially attractive property type for senior living investors and developers, according to Lana Peck, a senior principal with NIC.

“More recently, in part due to concerns of supply and demand imbalances in assisted living among investors and developers, there’s been increasing inventory growth in independent living,” Peck said. “Sustained growth and mostly matching rates of absorption through 2017 really allowed for the occupancy rates to be sustained around 90% for the past few years.”

In the past year, roughly 11,000 independent living units have opened across the primary and secondary markets NIC tracks. About one-third of that growth occurred in just seven metro areas: Dallas; Philadelphia; Columbus, Ohio; Fort Myers, Florida; Houston; Detroit; and Austin, Texas.

Occupancy for the property type is expected to remain stable in many major U.S. metropolitan areas in the quarters ahead, Peck added—but insofar as there will be a change, it likely will be a decrease.

“Going forward, we expect the occupancy rate to remain reasonably strong in the 90% range, but still deteriorate slightly in the first quarter of 2019 because inventory growth is expected to exceed absorption growth in this period,” Peck said.

Active adult a ‘new frontier’

These days, the active adult segment is filling some of the roles that independent living communities played just a decade prior.

“Currently, the [independent living] consumer profile is almost the same as assisted living,” Peck said. “It’s different than 10 years ago, when it used to be much more like what we’re seeing coming out of the active adult category now.”

While Washington, D.C.-based senior living investment and development firm Capitol Seniors Housing (CSH) had traditionally invested in independent living communities in the past, it branched out into the active adult marketplace last year. Today, CSH invests primarily in the “bookends” of the senior care continuum: active living, memory care and assisted living, said Scott Stewart, managing partner at CSH.

“We experienced the difficulties of having independent living,” Stewart said. “While we still like the space in certain markets, we’ve gravitated more toward the active living side…we think it’s the new frontier for senior housing.”

For Stewart, the decision to focus on that property type lies partly in a desire to attract a younger segment of the aging population.

“We found that, with our properties in independent living, we were dealing with folks that were in their 80s,” Stewart said. “With active living, they’re more 68 to 75.”

One of the primary reasons seniors are flocking to active adult communities is that they want to be around likeminded peers, he added. They also want an outlet for hobbies and activities they enjoy, and to live in a maintenance-free, stress-free environment. Other reasons include being closer to their children and grandchildren and wanting to cash in on their home equity, which likely has risen dramatically since they first purchased their homes.

But that doesn’t mean active adult communities can’t evolve sometime down the road. Stewart said some developments are building flexibly so that the social spaces of today could be converted later on into venues with commercial kitchens.

“If they have to change the use and convert it from active living down the road as the population ages in place, that’s an option,” he explained.

‘Adapt the Marriott Courtyard model’

The senior living industry has seen the rise of multipurpose common areas that can fill many roles. For example, a fitness center might become a yoga studio one day and a venue for dance lessons the next. These kind of flexible spaces are important in independent living communities preparing for the future, according to Martin Siefering, principal at architectural firm Perkins Eastman.

“I like to compare this to the way that Marriott Courtyard deals with this. In the morning, their common space is called the breakfast room. In the evening, it’s called the bar, and at night, it’s called the restaurant,” Siefering said. “That gives you, within one room, more choice and more flexibility.”

Another trend he identified was the need to design communities with homelike design features, such as full kitchens, walk-in closets and bath-and-a-half setups. The idea is that, in order to entice healthy seniors, providers need to offer them many of the things they currently have at home.

“We try to get the same kind of amenities you’d have in an apartment,” Siefering said. “They’re not really giving up anything when they move in.”

Residents crave experiences

One way to entice residents to move into senior living communities at a younger age is to offer them stellar experiences, according to Gerald Jackson, senior vice president of operations for Solstice Senior Living. Solstice is a 32-community operator formed by a partnership between management company Integral Senior Living and real estate investment trust (REIT) Colony Northstar in 2017.

The centerpiece of that is “Vibrant Life,” a series of activities programs developed by Integral to optimize the health and wellbeing of residents. One example of that is “Livin’ the Dream,” an initiative designed to help older adults live out their lifelong dream activities, such as flying a plane or riding on a zip line.

“This is a wonderful opportunity for us to help change that whole perception of aging,” Jackson said.

Other experiences Solstice offers includes volunteer opportunities and restaurant-style dining that independent living providers must employ in order to stay competitive, he added.

Written by Tim Regan