University, Farm Sell-Offs Open Senior Housing Development Opportunities

As senior housing developers search for new opportunities across the U.S., they’d be wise to consider a wide range of options — including unconventional sites such as former farms or shuttered university campuses.

Though these real estate opportunities may take hard work to find and secure, they are becoming available due to trends higher education and agriculture. And they might present new ways of thinking about senior living as the market is beginning to demand a greater diversity of options.

Already, there are some senior living providers across the U.S. that have embraced farm-style senior living, either as an added programming element or as a competitive differentiator. And, there is a burgeoning trend in buying and building on former college campuses, exemplified by what real estate investment trust (REIT) Welltower (NYSE: WELL) seeks to do with its recent acquisition of the former Newbury College campus in Brookline, Massachusetts.

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Adapting and reusing former properties is not a new trend in senior living. For years, industry stakeholders have bought and redeveloped former skilled nursing buildings, hotels, offices, school buildings — even former psychiatric hospitals — into senior living communities. When viewed through that lens, the idea of locating senior housing on farms and former university campuses isn’t such a wild idea.

While these kind of sites could give developers a creative way to enter high-barrier-to-entry markets, they also come with their own set of challenges. Like with other adaptive-reuse buildings, developers and architects must pay special heed to building codes, some of which are cost-prohibitive. Still, developers would be wise not to rule these sites out entirely.

Back to school

It’s no secret that the aging baby boomers will bring with them a new set of preferences when they move into senior housing en masse. And there is evidence that they’ll want to live in urban centers that are within walking distance of retail, restaurants, health care, transportation and other amenities.

Building senior living on a former college campus could check one or more of those boxes, according to Jerry Doctrow, a former Stifel analyst who authors the blog Robust Retirement.

“There is a history of developing senior housing affiliated with colleges,” Doctrow told Senior Housing News. “What’s been less talked about, but is clearly an opportunity in my view, is … redeveloping part or the entirety of a college campus into senior housing.”

Part of the opportunity has to do with the worsening financial outlook for colleges, particularly among smaller, private institutions. Meanwhile, the number of students graduating high school in the U.S. is expected to stagnate in the coming years, painting an even more dire picture for higher education.

Already, some colleges are shuttering in the face of such headwinds. Since 2016, 20 nonprofit or private universities have closed their doors, according to a running list from Inside Higher Education, a digital media company that tracks the space.

While these closures are bad news for the higher education sector, the trend could present an opportunity for developers.

“Smaller colleges are facing increasingly difficult financial and competitive prospects,” Doctrow said. “I think senior housing developers should be focusing on this as an opportunity area.”

The basic idea is that college campuses already come with buildings, infrastructure and amenities that, with a little bit of repositioning, could serve a senior living community well, Doctrow said. Many of them are also located near walkable urban centers, and with access to a nearby labor force. And, some of those colleges are located in or near large metro areas where greenfield development would be hard to source or finance.

While the model could work for different types of senior housing, one obvious choice would be continuing care retirement communities (CCRCs), many of which already house hundreds or even thousands of residents on college-like campuses. From Life Care Services to Erickson Living and most major senior housing nonprofits, there are already many companies that invest heavily in large-scale campuses full of amenities.

These types of communities would work well as a model for future development at former colleges, Doctrow said.

“You’re starting off with something that, from a location and design standpoint, works for a CCRC,” he added.

There are also opportunities to build smaller senior housing communities on college campuses that aren’t yet closed.

A developer could acquire one or more buildings on a university’s campus and turn them into a mutually beneficial senior housing community similar to what already occurs with university-based retirement communities. This way could help small colleges survive, while in the process giving older adults a desirable housing option.

“If you think of a college that maybe only has 500 or a couple thousand students, putting in a 300 unit senior housing community is going to have a major impact on that,” Doctrow said. “But the senior housing developer is going to have to really be reliant on the college to make sure it’s still viable.”

Already, there are some signs that this trend is coming to fruition. In September, senior housing and health care REIT Welltower purchased the campus of Newbury College for $34 million with the aim of turning it into senior housing. Welltower declined to elaborate on the move when reached by Senior Housing News.

“I don’t think this is going to reshape the senior housing industry but it’s one of those things that senior housing developers ought to be taking a look at,” Doctrow said.

Buy the farm

Like universities, small farms could also offer a new avenue for senior housing developers in search of new opportunities.

Farmers and ranchers in the U.S. have seen a nearly 50 percent drop in net farm income since 2013, according to USDA data compiled by Farm Aid, an advocacy organization that also holds an annual benefit concert under the same name. As a result, many small farms are facing bankruptcy or foreclosures.

At the same time, the number of older adults in rural markets is expected to rise in the coming year. According to American Community Survey (ACS) data from between 2012 and 2016, there were 46.2 million older people in the United States, with 10.6 million of them living in areas designated “rural” by the U.S. Census Bureau.

“An older, increasingly rural population requires specialized medical and rehabilitation services, as well as innovative housing and public transportation options,” read a recent Census Bureau report on older adults in rural America. “An aging population clearly has the potential to shape rural America in new and important ways.”

These trends could present opportunities for senior housing developers and investors, at least where the stars align. Inspirations Memory Care, a senior living provider with one farm-style community in Westminster, Maryland, is one such example.

That community came together about five years ago, when a six-acre property that held a working farm and a shuttered assisted living community went up for auction. Inspirations Memory Care co-owners Ben Slabaugh and Kacey Troyer immediately jumped on the opportunity, winning the auction with the intent of renovating the property and turning it into a farm-style memory care community.

“The bank was going to remove the animals after the auction,” Slabaugh told SHN. “But when we saw the animals, we thought, no way man, we want those animals for our memory care community.”

Co-locating senior living and farms is not a new industry trend, and providers are already finding ways to build urban farms and have memory care residents interact with farm animals.

As unconventional as the model is, it can be successful for some.

For example, Heartland Assisted Living, a small-home style senior living community with 10 beds in Roberts, Montana, has fielded calls from interested prospective residents from across the U.S. and the world, according to the company’s owner, John Dubksy.

“We’ve had people call from the UK, from Japan, from Australia,” Dubsky told SHN. “It would be a good business opportunity … if a person had some ranching background history and some medical experience.”

Heartland is expanding its model, with forthcoming locations under development in Ohio; Boulder, Colorado; and Houston, Dubsky said.

While the farm-style model comes with its own challenges — such as finding staff who can help take care of animals or farms — there is a clear opportunity for companies willing to take the risk.

“As cities expand and you have farms that are being surrounded by newer development… you can utilize some of those physical buildings,” Slabaugh said. “There’s certainly a challenge with it, but I like the idea of repurposing properties.”

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