Senior Apartments Gain Traction, Skew 10 Years Younger Than Independent Living

Senior-only apartments have emerged as their own product type, which may compete to some degree with independent living but is mostly attracting a different, younger resident.

That’s according to JLL’s 2019 Seniors Housing Survey, which reached out to over 1,000 lenders, operators and industry consultants about their confidence in senior living as an investment class through the next 12 months.

Overall, respondents are cautiously optimistic about the senior housing market, even with a slight dropoff in transaction volume in 2018. While transaction volume totaled $13 billion last year, the total number of deals increased 41% year-over-year.

This is a sign that, while large portfolios with price tags of over $1 billion were on the wane compared to previous years, investors were checking down and acquiring single assets and smaller portfolios, JLL Vice President of Research Lisa Strope told Senior Housing News.


Senior apartments gaining traction

Emboldened by stabilizing occupancy rates, rising rents and the eventual influx of baby boomers into senior living, respondents expressed optimism in values appreciating moving forward. And they are particularly bullish on senior apartments.

“What came across in the survey is that it’s turned out to be a unique asset type,” Strope said.

JLL’s research indicates an average age of occupancy for senior apartment move-ins in the low 70s, compared to the low 80s for full-service independent living. That, and the lack of the service component standard in independent living, makes senior apartments a more affordable alternative to independent living, while fostering community and security.


Between 5% and 8% of baby boomers are expected to transition to senior apartments over the next 20 years. This equates to as many as 6 million people born between 1946 and 1964 needing age-restricted housing.

More important, the 10-year differential in average age of entry suggests senior apartments can be considered their own product type, able to exist alongside independent living without causing a significant impact on the latter’s performance.

“Senior apartments are targeting a different part of the population,” Strope said. “This is becoming more clear as the product type matures.”

Still, 75% of respondents said that they expect senior apartments to be competitive “to some degree” with independent living.

JLL’s research found that 57.1% of respondents indicated they see modest increases in value for senior apartments, compared to 45% for freestanding independent living and 40.4% for senior housing.

These findings track with the 2019 Senior Housing Outlook Report from Hunt Real Estate Capital and Senior Housing News, which found active adult surpassed memory care in the eyes of investors, and was second only to independent living as an investment type.

Senior housing real estate investment Courtesy of JLL
This graph shows investor confidence in value appreciation in seniors-only apartments moving into 2019, versus investor confidence in senior housing.

Lower expenses

Another contributing factor in investor confidence for senior apartments is less growth in expenses, compared to that of the higher acuity product types.

Since senior apartments are almost exclusively a real estate play, they have no service component compared to independent living, assisted living and memory care communities. If an investor can acquire senior apartments at a low cap rate, it can push revenues through rent increases over time, and realize a higher yield upon exit regardless of length of hold, Strope told SHN.

Although active adult is gaining in popularity, it is still a relatively new product type and Strope noted it needs to go through some growing pains before it overtakes independent living among investor appetites.

“Both are going to be very strong moving forward,” she said.

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