As senior living companies face intense labor pressures, some organizations are beginning to provide workforce housing for their employees.
Doing so is not simple, but providing affordable housing can be a recruitment and retention tool for front-line employees, while adding new rental stock to markets in need, Presbyterian Homes & Services President and CEO Dan Lindh told Senior Housing News. Roseville, Minnesota-based Presbyterian owns and operates 45 communities across the continental U.S., totaling 7,824 units, and is the fourth-largest nonprofit senior living organization, according to the 2019 LeadingAge Ziegler 200.
Presbyterian is embarking on a workforce housing development strategy after several of its communities were informally providing employee housing in a variety of small ways, such as the utilization of extra available rooms. Its largest employee housing community is at Lake Minnetonka Shores in Spring Park, Minnesota, which has a dedicated apartment building adjacent to its campus housing up 50 employees at any given time.
Another provider, Broad Reach Healthcare, is providing workforce housing for its staff, CEO Bill Bogdanovich told SHN. North Chatham, Massachusetts-based Broad Reach operates a campus in Cape Cod with a range of care options from assisted living and skilled nursing to rehabilitation, hospice and palliative care.
A lack of affordable workforce housing
There is a glaring need for workforce housing in the U.S. Almost 4 million homes renting for under $600 per month were lost since 1990, according to research from Harvard University’s Joint Center for Housing Studies. Overall rental stock, meanwhile, increased by 10.9 million homes between 2000 and 2017; 95% of that growth is in homes renting for more than $1,000 per month.
Presbyterian Homes conducted a survey of its front-line workforce last spring — 793 of nearly 4,600 employees completed all or part of the survey.
Forty-nine percent of respondents said cost of housing would need to improve for them to stay at Presbyterian; 64% were somewhat interested, very interested or extremely interested in renting affordable housing from Presbyterian if presented the opportunity; and 19.1% were both very or extremely likely leave the provider if their housing situations did not improve but very interested or extremely interested to rent housing from Presbyterian.
As for Broad Reach, being in a resort area already impacts the availability of affordable housing in Cape Cod.
Over 36% of the area’s total housing units is seasonal, and 72% of properties are vacant for most of the year, according to a report by the Housing Assistance Corporation of Cape Cod. The ongoing real estate development boom has widened the gap, Bogdanovich told SHN.
“As a result, our challenges of recruiting and retaining front-line workforce has become greater,” he said.
A recruitment tool
Providing affordable housing for front-line staff would give providers a competitive advantage, particularly in tight labor markets, Senior Housing Partners Vice President Jon Fletcher told SHN. Senior Housing Partners is the development arm of Prebyterian Homes & Services.
There are currently 3.6 working age adults (ages 18 to 64) for every one adult living in senior housing, according to Census data. This is projected to drop to 2.8 working age adults for every senior adult by 2030 — a 22% reduction over the next decade.
“With workforce housing already hard to secure, this creates challenges for employees to maintain active employment, and also creates significant household pressure to ‘job hop’ based on fairly nominal increases (10-25 cents per hour) in wages offered elsewhere,” Fletcher said.
At Lake Minnetonka Shores, front-line workers who rent the community’s workforce housing receive a 10% discount on rents, and units are also available to renters who do not work for the community. Rents are listed at $650 per month for a one-bedroom unit to $900 per month for larger, two-bedroom units, Lake Minnetonka Shores Care Center Administrator Lydia Buetow told SHN.
In total, Lake Minnetonka Shores owns 92 units. Fifty employees rent housing in the buildings.
Broad Reach Healthcare bought its first apartment building 18 months ago, and added 14 more units in 2019. Bogdanovich told SHN. Employees can rent one-bedroom units for $1,000 per month for a one-bedroom, and two-bedroom apartments range between $1,250 to $1,300 per month. The average rent for a one-bedroom apartment in Cape Cod is around $1,500 per month, while two-bedrooms can rent for as much as $1,750 per month.
Currently, 12 of Broad Reach’s 300 employees rent workforce housing, and more are expected as existing leases expire.
“We tried to see where we could be more creative to bring to the front-line workers something that potential competitors weren’t doing. We leveraged some of the real estate market’s activity to buy (apartments) in a way that we could support with reasonable rents on a break-even basis,” he said.
The benefits to workers go beyond simply putting a roof over their head at an affordable rate. The proximity to Broad Reach has helped reduce expenditures on gas as well, a Broad Reach nursing assistant told The Boston Globe. Meanwhile, Broad Reach’s census has improved to 92% since the workforce housing was introduced.
Lake Minnetonka Shores’ workforce housing initiative has been successful so far. In addition to the employees renting apartments, there has been a reduction in open shifts as workers who live next to the community have picked up those openings, Buetow said. Workforce housing has also served as a powerful tool for recruiting international workers; 19.1% of Lake Minnetonka Shores’ international staff has utilized workforce housing at some point.
Recruiting staff from outside the country is one of the reasons that Presbyterian is developing and workforce housing on a larger scale, Lindh told SHN.
“We’re doing a fair amount of work internationally with immigration [challenges],” he said.
Presbyterian’s future workforce housing locations will be determined by the proximity to areas of greatest affordability demand; the number of employees impacted; proximity to Presbyterian community locations; and access to community services such as transportation, grocery and schools, Fletcher told SHN.
So far, the provider has identified the Minneapolis-St. Paul suburbs of Arden Hills, Stillwater, and Bloomington as high-potential workforce housing markets, and Fletcher anticipates the total need to be approximately 400-500 units, depending on market conditions.
“The intent is that the program will be scaled in a way that will provide the greatest positive impact on our employees facing an affordable housing challenge,” he said.
Presbyterian Homes will seek out older multifamily assets for its workforce housing initiative — buildings around 20 years old, in overall good shape and possibly in need of some capital improvements, Lindh told SHN. The provider is not opposed to new workforce housing development, as long as it can be easily scaled up.
One challenge to investing in workforce housing is establishing boundaries so that workers do not feel as though they are on the job 24-7, and are afforded some semblance of privacy when not on the clock.
“Sometimes you find out things about your employees that you weren’t hoping to find out. They have a change in circumstances or they have family issues, domestic issues. Even though we own it, but we have to have it flexible,” Lindh said.
Lindh envisions more providers offering workforce housing, particularly if the industry continues trending toward development in urban markets where housing costs and other expenses place added strains on the budgets of front-line employees.
“Getting into housing is a daunting deal. But if you’re in Seattle or San Francisco or New York, it’s hard to imagine how you can even conceive of the idea of [workforce housing]. The issues are pressing for us, but they have to be more pressing in other parts of the country,” he said.