The Southeast is emerging as a hotbed for middle-market senior housing development.
Knoxville, Tennessee-based senior living owner-operator Solinity formed a partnership with Paran Homes to develop, own and operate senior housing aimed squarely for the middle market, Solinity CEO Josh Crisp told Senior Housing News.
Duluth, Georgia-based Paran Homes is a residential specialist with 19 communities in the greater Atlanta area, Raleigh, North Carolina and Nashville, Tennessee. Solinity’s portfolio encompasses seven communities in Florida, Georgia and Tennessee.
“Our vision is to make the product as accessible as possible by tying in to the middle market, which is such a huge, underserved sector,” Crisp said.
Other developers in the Southeast are committed to building middle-market senior housing. One, Prime Senior Living Group, has a development underway in Knoxville, Tennessee and is building a development pipeline in North Carolina and Georgia.
“There is definitely a need in the market, as the population is aging,” Paran Homes CEO Whit Marshall told SHN.
A shared mission
Discussions between the two companies started six months ago, Crisp told SHN. Paran Homes has several sites of interest adjacent to residential housing communities it already built. The company knew it wanted to build senior housing but needed a better understanding of the industry’s details, and where it overlaps with residential housing.
As those discussions deepened, Solinity and Paran Homes realized their main commonality is a mission to bring high-quality housing product to a consumer base that has been largely ignored in favor of market-rate development, in senior living and traditional multifamily.
The two firms also discovered there is an untapped demand for senior living in Paran Homes’ markets, and decided to partner.
“We want to leverage the horsepower and experience of [Paran Homes’] development and design builds in their markets, as well as our knowledge our understanding of the development process, marketing specifically for senior housing,” Crisp said.
In order to appeal to middle-market seniors, the communities Solinity and Paran Homes plan to build will have no entry fees and everything will be rentals. To attract renters, Solinity does market-rate analysis of the competition in a given market, and sets its pro-forma rents anywhere between 5% and 25% lower, depending on the market.
Adding intergenerational and mixed-use components
The Solinity-Paran Homes partnership is already at work on amassing a development pipeline. Crisp confirmed two sites are in the planning stages — in Henry County, Georgia and Simpsonville, South Carolina, a suburb of Greenville.
The sites, which Paran owned prior to the venture, are not the smaller lots typically associated with middle-market senior housing. These large tracts of land range between 25 and 35 acres, sizes which lend themselves to adding intergenerational and mixed-use components.
The Solinity-Paran Homes venture is looking for sites of at least 20 acres in other markets where Paran has built residential housing, Marshall told SHN.
Of the two confirmed sites, the Georgia is further along in the entitlement process and initial discussions with local government departments have been encouraging, Crisp told SHN.
“Everybody involved [in the discussions] agrees this product is needed,” he said.
The Georgia development will feature a range of senior living care including independent living villas and congregate care apartments, assisted living and memory care. The front of the property is earmarked for retail with a town center feel, which the Solinity-Paran venture believes will appeal to residents and the greater community alike, creating an intergenerational experience.
Discussions about unit volume and mix are ongoing but, given the sizes of the sites Solinity and Paran are targeting, the goal is to build between 250 and 300 units per development, Marshall told SHN.
The other fundamental component of the development is a children’s day care center. In addition to helping build the intergenerational environment, Crisp believes the day care center can be used as a recruitment tool for new workers, especially single parents struggling to find child care so they can go to work.
Solinity employees would be able to register their children at the day care center, at discounted rates. Additionally, the center could be leveraged so that senior living residents would serve as mentors for the children and parents.
“When you bring younger people in contact with older people, it gives seniors new life and energy,” Crisp said. “It’s good for younger kids to have the influence of mature adults in their lives.”
The gap in middle-market senior housing has been in the spotlight in recent weeks. A new report commissioned by the National Investment Center for Seniors Housing & Care (NIC) revealed that 54% of middle-income seniors will not be able to afford senior living at today’s market rates in a decade.
Senior living providers and operators are now turning their collective attention to addressing the middle-market gap. NIC suggests cutting annual rates by $15,000 per resident would open the industry up to the middle market.