The senior housing industry has long contemplated the “urban opportunity,” as large cities appear to be in-demand markets for retirement communities.
To do this successfully, though, “it takes a willingness to jump through flaming hoops,” Dana Wollschlager, principal at senior living consulting firm Plante Moran Living Forward, said during a June 28 webinar hosted by Senior Housing News.
Perfect place for mixed-use
While the prospect of jumping through flaming hoops is daunting, there is a reason why senior living developers might be willing to do so. In many ways, cities are the perfect places to create senior housing projects.
“Some of the densest senior populations, and some of the wealthiest senior populations, are in urban areas,” Ben Burke, president of senior living at Chicago-based real estate investment holding and development company CA Ventures, noted during the webinar.
The latter group is the ideal target for senior housing developers.
“People who are coming out of homes, condos or high-rise buildings in urban environments, through the sale of their homes, are able to afford monthly rentals that are hefty but that are required to support not only the real estate but the cost of the operations,” Patricia Will, president and CEO of Houston-based senior housing provider and developer Belmont Village, explained during the webinar.
Belmont Village is currently building a senior living community in Chicago’s Lincoln Park neighborhood; the provider also recently opened a $55 million mixed-use senior housing community in Mexico City, Mexico.
Yet even if a provider is able to attract this wealthy client base, in some large cities, rents alone might not be able to fully support the project financially, given the high costs of land.
“Seniors housing, as a use by itself, can’t pay for the land,” Will explained.
In these instances, developers can use ground-floor retail to subsidize that cost, Manny Gonzalez, principal at KTGY Architecture + Planning, suggested during the webinar.
The inclusion of a retail component—as well as potentially a hospitality component, office space, multifamily residences and a lifestyle component—can also help market an urban senior housing community to potential residents.
Some of the most successful urban senior living communities aim to merge these five components, but it’s not necessary for developers to deliver all of them.
“Maybe you don’t have all five of these options in a particular community, but maybe you can offer two,” Wollschalger said. There might, for instance, be plenty of retail shops within walking distance from the community, if there’s no space to house them within the building itself.
In general, the goal of an urban senior living community is to provide everything a senior is used to having.
“Creating an option that is all of the things that [residents] had in the places where they were raising their children—that’s exactly what this model does,” Wollschalger said.
Need for passion and patience
All things considered, developing an urban senior housing community is no easy task.
“You’ve got to have tremendous patience,” Will said.
Plante Moran Living Forward, for instance, has worked with senior living clients whose urban development projects have taken as long as 15 years to complete, Wollschlager added. It’s rare for these projects to be completed in less than five years, she suggested.
Above all, it’s critical for senior housing developers to respect the processes and procedures a city has in place with respect to new developments and land use, even though these can be byzantine and bureaucratic.
“If you are taking on a city instead of embracing a city, it’s impossible to get done,” Will concluded.
Written by Mary Kate Nelson