How Covid-19 May Validate Cantina’s Pocket Neighborhood Active Adult Model

Editor’s Note: Interested in the active adult market? Check out SHN’s Active Adult Virtual Summit, taking place July 15-17. Click here to learn more and register.

Startup Cantina Communities came into 2020 with momentum, and its founders were pushing hard to make their vision of active adult living a reality — then Covid-19 struck.

The pandemic has presented unexpected obstacles for senior living companies of all types, and Cantina is no exception. Fundraising in particular “came to a grinding halt,” Co-Founder A.J. Viola told Senior Housing News.

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However, Covid-19 also offered an opportunity to further refine the Cantina model and gain deeper insights from potential consumers.

And, the coronavirus outbreak is making Cantina’s focus on small homes, affordable prices and modular construction appear prescient. Several senior housing and real estate experts, including architects such as Perkins Eastman and research firm Meyers, have predicted a rise in these trends due to Covid-19.

“I think an inadvertent outcome of designing [Cantina] the way we did is that it does feel like it’s fairly resilient when it comes to a pandemic response situation,” Co-Founder Zachary Hollander told SHN.

Refining the design

As of January 2020, Hollander and Viola had secured a site near Austin, Texas, for Cantina’s first community, and they were in the process of raising $6 million to $7 million in equity. But they backed off fundraising when Covid-19 hit the United States in mid-March, as investors went into wait-and-see mode.

“The upside of that is it’s given us the opportunity to focus a lot more on design and development,” Viola said.

As part of that effort, the team has conducted 20 qualitative interviews with baby boomers, all of whom first reviewed a 35-page design packet about plans for Cantina. These are among the key takeaways:

— Many boomers are still working, are starting businesses, or are active on boards or volunteering. They value having a work space in their home even more in light of Covid-19, as they were already less likely than other demographic groups to work in a cafe or co-working space, and now these types of environments are either closed or pose greater infection risks.

— They readily adapted to Covid-19 by using technology to remain social during periods of lockdown, showcasing that they are a tech-savvy group. As restrictions have eased, they have begun to socialize outdoors with social distancing in place. They value having outdoor access and space to do so.

— “Shelter in room” does not go over well with this group. Direct access to the outdoors is valued, as are large windows and high ceilings, to combat any potential sense of claustrophobia should future quarantines occur. They are not drawn to multifamily formats where they would face exposure risks simply walking from their units to their cars.

The findings have helped Cantina finalize its designs and largely validated the approach that the company already was taking. Plans call for 90 units in small homes that would be in a pocket neighborhood layout across the 6.5-acre site, with shared common areas such as a great house with a cafe, community manager station, flex spaces and other amenities.

Courtesy Cantina Communities

Small homes and pocket neighborhoods have been on the rise in senior living for many years, but Covid-19 has led to a surge in interest. That’s because large congregate settings have been hit hard by the virus, whereas infection control is easier in settings with fewer people, where isolation is easier to accomplish. Pocket neighborhoods of small homes also could meet consumer preferences for maintaining independence and privacy while also having a built-in social network.

“Everyone’s trying to thread that needle,” Viola said.

Tech, affordability, modular construction

The Cantina model also incorporates several other elements that were gaining ground prior to Covid-19 and could now become even more widely adopted.

Senior living has been notoriously slow to adopt new technologies, but Covid-19 prompted a surge in telehealth, as well as increased interest in a variety of other technologies such as communication platforms and video capabilities.

Hollander and Viola bring a strong tech background to Cantina. Hollander was previously Google’s global head of strategy, insights and business operations, mobile hardware marketing. Viola, a graduate of Harvard Business School, was COO of D-Rev, a company that has launched affordable medical devices.

Neither believes that Covid-19 will lead to a “massive tech revolution” in senior housing, but that the pandemic has shown the value of telehealth and other “very obvious things” that make sense for older adults. There is “incredibly low hanging fruit” that Cantina is going after from a tech perspective, in terms of facilitating and coordinating residents’ use of existing technologies — such as on-demand services and communication tools — via streamlined platforms, Hollander said.

“It’s really about taking basic things, like basic collaboration tools, communication tools, and introducing people to new types of services that, taken together, can meet their needs,” he said.

Courtesy Cantina Communities

In the increasingly crowded active adult market, Cantina also was seeking to provide a middle-market option with rents ranging from around $1,600 to $2,600 a month. The quest for affordable senior housing models was already heating up before Covid-19, and this is yet another trend that the pandemic likely will accelerate, given the economic devastation caused by the crisis. Older adults have seen their finances suffer as markets have cratered, and massive layoffs may limit the ability of adult children to subsidize their parents’ senior housing costs.

Affordable price points would be enabled in part by savings on the front achieved by using modular construction to create the community. Modular of pre-fabricated construction techniques have made huge leaps in recent years, with large firms such as Skender and innovative startups making this type of construction more mainstream and appealing. Cantina Communities has been working with Ma Modular for its Austin project.

The benefits of modular include off-site construction in a more controlled environment, which helps cut costs while increasing efficiency and predictability in terms of timelines. The age of Covid-19, when construction sites become risk zones for outbreaks, provides another argument in favor of modular approaches.

For all these reasons, Hollander and Viola remain optimistic about the future despite the near-term challenges of Covid-19. And they have continued to make progress. Last week, they completed community outreach with impacted neighbors. They anticipate moving through city planning and zoning approval in mid-July and moving on to the city council in August. Their goal is to break ground by December 2020 and open by Q4 of 2021.

Still, challenges remain, particularly with regard to funding. Capital has begun to flow into the space more freely in recent weeks, but there are still questions about where investors see the greatest opportunity.

The hope is that investors are observing how Covid-19 has disrupted the typical senior living model, and more future-oriented partners will emerge to back innovative ventures rather than “tried-and-true” models that may not be as safe as they once were, given shifts in consumer preferences and market dynamics, Hollander and Viola said.

“I think that’s going to shake out for a little while, but we’re hoping there’s a consensus around what we’re hearing in terms of what consumers want and what people are willing to put capital behind,” Hollander said.

Interested in learning more about Cantina and the active adult market? A.J. Viola is one of many notable speakers at the SHN Active Adult Virtual Summit. Click here to learn more and register.