SHN+ Report: The Changing Face of Active Adult Rental

November 2019

Key Takeaways

  • 97% of senior housing professionals believe active adult’s popularity will rise over the next three year
  • 87% of senior housing professionals are currently pursuing active adult, which is a key product for multifamily developers, too
  • Senior housing operators believe their industry is better suited than multifamily to develop active adult
  • Active adult has the potential to become the first official step in the senior housing continuum
  • The 4 trends that show the active adult opportunity for senior housing

The 231-unit Canvas Valley Forge, in King of Prussia, Pennsylvania, from The Bozzuto Group, was opened in May 2018.

“What do boomers want?”

This is a question that senior housing operators face everyday, with one answer growing more rapidly than any other: active adult rental apartments.

That’s because as senior housing operators study market trends and listen to their consumers, what they are finding is that a mix of lifestyle and economic factors are pushing healthy, young baby boomers to explore housing options outside of their lifelong homes.

What these boomers want is a nontraditional senior housing option with no care component — something that affords them an active, wellness-based, social-driven lifestyle with lower economic commitment and greater flexibility. They are finding it in active adult rentals.

These age-restricted or age-targeted multifamily-style apartment communities have soared in popularity this decade among young baby boomers. They may share a general name with the Del Webb-style single-family home master planned communities, but active adult rental apartments are a separate product type with a different consumer base and unique benefits and risks.

In other words, while the product isn’t necessarily new, four key elements are: consumer demand, investor popularity, the players behind it and its place in the care continuum.

Consumer interest is rooted in a senior’s desire to strip away the cost, responsibilities and commitment of home ownership.

Yet that is just half of the equation. Since active adult apartment rentals are primarily a lifestyle-driven product, not a needs based one, the product’s allure must be strong enough to sway these young, healthy boomers to leave their long-time houses in the first place.

The allure is the lifestyle that active adultaffords, and the inherent acknowledgement that seniors who don’t need onsite care don’t want to live with people who do.

The allure is strong. In a recent Senior Housing News survey of 120 senior housing professionals, 87% of respondents are currently pursuing active adult. Both traditional senior housing operators and multifamily developers are making huge commitments in the space, with one senior housing company making a $1 billion bet on active adult and selling its traditional senior housing to do so.

With this flurry of activity on both the consumer and developer side, it’s no wonder that investment interest in the asset has tripled in the past four years.

This report reveals the depth of that interest, the execution of the product, the mindset of the consumer — and how these factors are re-writing the paradigm of senior housing.

Senior Housing News Research Reveals Industry’s Active Adult Enthusiasm

In September 2019, a Senior Housing News survey of 120 senior housing professionals revealed just how bullish the industry is on active adult. Senior housing operators believe the product will continue to gain popularity in the next three years, and as a result, they are largely pursuing these projects and believe that senior housing, not multifamily, is best equipped to develop active adult.

Below are the four main questions posed in the survey.

The Demographic Opportunity

The raw numbers showing the size of the baby boomer generation — including the oft-cited 10,000 boomers turning 65 each day — give only a vague sense of the opportunity for active adult providers, because those numbers reveal little about the consumer other than the market size.

When the operators and developers who truly understand the stakes drill deeper into these figures, what they find is a vast consumer base seeking wellness, fitness and socialization. These consumers want an active lifestyle, perhaps even a glamorous one, at least compared to how they have lived for the bulk of their adult life.

In May 2019, as part of the SeniorCare Investor Interactive Webinar Series’s “The 55+ Active Adult Market: The New Frontier of Seniors Housing,” Capitol Seniors Housing active living principal Michael Hartman noted the income range for active adult consumers. According to Hartman, they typically earn between $25,000 and a high-end range of $75,000 to $100,000, and in many cases their assets are even greater, as they are selling their houses to facilitate the move.

They prefer renting over owning due to economic and logistical flexibility. They long for a sense of community, whether that means remaining in their longtime neighborhoods or cities, or moving to a new city to live closer to their adult children.

They are healthy enough to not need traditional care-based senior housing, but they also do not want to move into their lifestyles will conflict with younger residents.

Nor do they want to live with older residents. These young boomers view themselves as young, and they want a housing option that caters to that mindset.

(In active adult) we’re not competing with multifamily (and) we’re not competing with independent living. What we’re competing against is our prospects staying at home…”

— Zachary Crowe, Principal,
The Carlyle Group

Their view of themselves as young is more than just optimism. In 1972, age expectancy for 65-year-old Americans was 15.2 years. In 2017, 65-year-old men live than 18 years, while women live 20.6 years, meaning the average 65-year-old in 2017 can expect to reach at least his or her mid-80s, with many people now planning for 90-or 100-year lives.

Through technology, diet, fitness and medicine, seniors in their 70s can also remain independent longer and better manage their chronic conditions. They are not moving into independent living as young as they once did. Ten years ago, the average assisted living resident was nearly 87 years old.

Today, that’s a normal age for an IL resident.

As a result, active adult apartment rentals have become both a gold mine and a no-man’s-land, with developers in both senior housing and multifamily positioning themselves as the optimal builder and operator. The young senior who once entered an IL community is now apt to age in place at home — unless someone can convince them to age in place in active adult.

In other words, just because young seniors don’t want to move into “senior housing” doesn’t mean they don’t want to move.

There are two main reasons that young seniors move into the active adult product:

1. An economic lifestyle — what comes from selling and moving

2. A social lifestyle — what comes from entering active adult

“We’re not competing with multifamily, we’re not competing with independent living,” Zachary Crowe, principal at The Carlyle Group, said in September 2019 at the National Investment Center (NIC) conference. “What we’re competing against is our prospects staying at home, generally speaking.”

The private equity giant The Carlyle Group is a major player in the active adult rental market, with 15 stabilized communities. It has multiple partnerships, including Greystar on its Overture brand, which according to its website offers 39 communities in 13 states.

What Crowe and others see when they look at the baby boomers flocking to active adult is a consumer base itching for someone to re-write the rules of senior housing in order to satisfy their lifestyle desires in two major buckets: financial, and social.

Economic lifestyle

The cost-saving impact, and the emotional consideration

Seniors moving into active adult do so for the socialization and active lifestyle, yet for many, whether moving out of homes they own or rent, there are economic factors as well. These factors often carry emotional weight, which impacts the buy process.

A Freddie Mac survey in April 2019 showed that boomers face greater economic strain around housing than any other age cohort: 74% of boomers had to spend less in the past two years to afford their mortgage or rent, 48% had to put less money toward savings and 44% had to move.

In September 2016, only 10% of boomer respondents to a similar Freddie Mac survey thought that renting was more affordable than owning. That number is up to 17% now. And only 14% of boomers believe it is “extremely likely” that their next move will be a home purchase.

“We see (boomers) downsizing and simplifying and taking the lead from the millennial demographic right now,” says Carey Levy, president of Passco Companies Development. “They want to have an active, invigorating opportunity to experience the next five to 10 years of their life without the mortgage, insurance, overhead and the cost of maintaining a home.”

Adds architect, principal and board director Dan Cinelli of Perkins Eastman: “You’re not getting the ‘55+ person’ — you’re getting the 75+ person who may be retired, but perhaps doesn’t want to renovate his or her house again. And because of the last economic downturn, they basically said, ‘I don’t want to own anything anymore. I don’t want to worry about maintenance or another recession. I’d rather take the money and rent.’”

Source: “Profile of Today’s Renter & Homeowner”
— Freddie Mac research, June 2019

A Deep, Emotional Experience

Yet that very move from homeownership to active adult brings another consideration into play. It’s the reason that in May 2019, when multifamily developer and asset manager Passco wanted to enter the active adult space, they hired senior living veteran Levy to lead it.

Levy brought 30 years of senior housing real estate experience to Passco, most recently as COO of Granite Investment Group, where he developed a portfolio of more than 40 senior housing properties, specializing in skilled nursing. What a senior housing veteran like Levy understands, and what multifamily developers are learning, is that the act of selling one’s lifelong house to move into active adult often carries a deep emotional component.

These are the homes where they’ve lived for decades, where they raised their children, perhaps even where they held a wake for the death of their spouse. As a result, lease-up is much longer in active adult than in multifamily, with experts estimating about 5-10 units leased per month.

“That’s one lesson we learned,” Crowe said about the slower lease-up times. “There were other folks who jumped in the space and figured they were going to lease their properties at 20 units a month, and that just isn’t realistic in this space. Seniors have a much longer decision-making process — three to five touches — especially if they’re selling their home.”

Because of the consumer’s deep, emotional ties to their lifelong house, lease-up takes longer in active adult than multifamily, with experts estimating just 5-10 units leased per month compared to perhaps 20 per month in multifamily.

Social lifestyle

What comes from entering active adult

A senior who wants to downsize out of their longtime house and seeks rent-based flexibility might still choose a multifamily apartment building. They choose active adult for the lifestyle it affords, from the peer group socialization to the amenities and services.

“A lot of these residents coming into these communities are widows or widowers, and they find themselves in a situation where they want to gain a sense of community, a sense of camaraderie,” Levy says. “We want to provide this quality living environment for them.”

The key draw into active adult, Levy says, is wellness — both physical and emotional.

That means an emphasis on amenities, services and common areas that offer a range of opportunities for residents to both stay fit and socialize.

While the residents might be drawn to the physical and emotional wellness that active adult provides, the operators should be too. The top reason why renters leave active adult is that their care needs advance. For the active adult portfolios of both The Carlyle Group and active adult developer Avenida Partners, the average resident age is 72.

That’s about 10 years younger than the average independent living resident. If an active adult developer can facilitate a lifestyle that keeps residents both happy and healthy, their residents can spend that entire decade in active adult before they age into traditional senior housing.

“If we treat them right, I think we have an opportunity to keep them for a very long time,” Robert May, founder and managing partner of Avenida Partners, said at NIC. “And with our life enrichment programs, our intention is to focus on that wellness, to keep them healthy longer, so that they don’t have to take that next step.”

For those privileges, along with the privilege of not living near younger people, these seniors are willing to pay rents that exceed the national averages for comparable multifamily units. According to data from, national multifamily rents in 2019 ranged from $838 for a studio up to $1,861 for a four-bedroom. Greystar’s Overture active adult line runs from $1,955 to $4,500.

Of course, rents change dramatically based on market, so looking at a single region is a better comparison. Take the California city of Palm Desert, 30 minutes southeast of Palm Springs. In 2020, in a joint venture with Avenida Partners, Passco Communities is launching its first two active adult communities, including one in Palm Desert.

In Palm Desert, the average rent for a one-bedroom apartment is $968, with a two-bedroom apartment at $1,211. A one-bedroom unit in the Passco-Avenida active adult community will nearly triple market rate, at $2,100, while a two bedroom will more than double market rate, at $2,600 — which is also $500 more than a multifamily four-bedroom apartment in that market.

A lot of these residents coming into these communities are widows or widowers, and they find themselves in a situation where they want to gain a sense of community, a sense of camaraderie. We want to provide this quality living environment for them.”

— Carey Levy, President, Passco Companies Development

Market Size

Simply put, the market potential of active adult is massive and growing by the day.

Certainly the raw numbers are enormous — the Institute on Aging notes that 82 million people will be 65 or older by 2030. Interest in the product also stems from its possible solution to the industry’s dire middle market challenge, as summed up by NIC’s data, which shows a rise of six million more middle-income seniors between today and 2029.

Those figures matter not just because of the number of seniors, but because of then timelines attached to them. Length of stay for active adult rental tends to be around four to seven years. Some operators are seeing stay lengths of 10 years or more. A senior moving into active adult today could be aging out by 2029, making room for the second wave of active adult residents who will have an even greater need and interest in the product.

There are deeper connections between the product and the consumer than just raw numbers. These consumers are not just drawn by cost, but by lifestyle, too. And in that respect, the most interesting renter analysis comes from Hartman, of Capitol Seniors Housing. In the SeniorCare Investor Interactive Webinar Series, Hartman put a number on just how large the potential active adult market is:

21 million households.

Hartman defined these households as ones occupied by prospective renters aged 55 and over with annual incomes of $25,000 to $75,000, who can spend 40% of their income on rent. Hartman identifies three tiers of active adult renters: the budget renter, who is focused solely on cost; the value renter, who is focused on lifestyle simplicity; and the luxury renter, who wants to spare no expense.

Yoga studio at Avenida Lakewood in Lakewood, CO | (Courtesy of Avenida Partners)

How active adult is becoming part of the care continuum

The older IL resident, the healthier and more active young boomers, the no man’s land between senior housing and multifamily, the desire to age-in-place — all of these factors are building into a central question that senior housing operators are now considering: Should active adult become the first stop in the care continuum, before IL?

According to 88% of respondents in the 2019 SHN survey on active adult, the answer is yes. The thinking is that a senior living operator can use a well-positioned active adult community as a resident pipeline into their IL and AL. Shoreview, Minnesota-based non-profit Ecumen is doing just that with a cooperative property in Duluth, Minnesota, which it opened in 2017 adjacent to its continuing care retirement community (CCRC). The CCRC sits on eight acres, and Ecumen purchased two adjacent acres before they knew how they could use it.

“(That) turned out to be a good idea in hindsight,” Ecumen’s chief business development

officer Julie Murray told SHN in early 2019. The company is betting that these cooperative owners will want to stay in Duluth as they age — and when they reach the point where they need care, Murray believes they will be satisfied with their brand experience and slide right over to the Ecumen CCRC.

The Product

As a marketing tool, the term “active adult” is both effective and slippery. On the one hand, it distinguishes itself from independent living and wisely removes the word “senior” — which this younger, healthier cohort largely dislikes.

Instead, it places an emphasis on the word “active,” which is how prospective residents of the product view themselves.

On the other hand, “active adult” is only valuable if there is consensus around its meaning. There is some level of complaint that “active adult” applies to both apartment rentals and sprawling communities of for-sale single-family houses, like Del Webb, and indeed, in September 2019, NIC announced that its Future Leaders Council is working creating a concrete definition of the product. This will help investors, consumers and industry leaders understand how to interact with it.

“In order to track it, we need to be clear on what comprises active adult,” NIC Chief of Research & Analytics Chuck Harry said upon the announcement.

Through a continuous process of exploration, the developers in the active adult space are beginning to define what is and is not active adult rental. Here is a general sense of what experts in active adult are delivering to consumers:

Defining criteria of active adult

  • Age-restricted or age-targeted apartment units
  • No care component
  • Unit counts ranging from below 100 to the low 200s
  • Dominated by 1- and 2-bedroom units, some with dens
  • Surface parking, typically with four stories of units atop the parking
  • High premium on common areas, both indoor and outdoor
  • Amenity-heavy, often focused on wellness, fitness and activity
  • No commercial kitchen
Photography by Ray Cavicchio, Courtesy of Perkins Eastman

Many active adult rental communities are positioned near urban centers, often on smaller tracts of land, Cinelli says.

“You’re not going to buy 18 acres — you’ll be lucky if you’ll be able to buy one acre,” he says.

From there, the community should have a “hospitality, club-feel when you walk in the door,” he says, and should be wellness focused.

“(You need) a fabulous wellness center: day spa, aerobics room and cutting-edge programming,” he says, adding that you want what amounts to restaurants without kitchens. “These mock restaurant spaces are where people can meet each other and create their own dining experiences. You might have four couples ordering dinner from a food truck — there has to be a really cool vibe experience and environment.”

Unit count and unit size

With the longer lease-up time, unit counts in active adult tend to run lower than in multifamily. Among new communities, the small side looks like Glen Oaks in Clear Lake, Iowa, with 48 units, or The Crescent at Oakleaf Village, a forthcoming 54-unit active adult community in Toledo, Ohio, with 54.

On the larger side are the Passco-Avenida properties at 161 units each, the forthcoming Aviva 55 brand from Lloyd Jones LLC, which will run 160 to 200 units, Azulon at Mesa Verde, a mixed-use active adult community in Costa Mesa, California, with 215 units, or Canvas Valley Forge in King of Prussia, Pennsylvania, with 231 units.

“I think that the sweet zone is really 140 to 160 units,” Avenida’s May said at NIC. “And I think that’s driven by the sense of community that this boomer is coming through and looking for something different.”

In terms of unit size, the majority of active adult communities skew toward one- and two-bedroom units. And whether the building is on the larger or smaller side, the units themselves tend to be similarly laid out.

At Crescent, there are only four unit sizes, ranging from 842 square feet for a one-bedroom apartment to 1,156 square feet for a two-bedroom. Den options can expand those floor plans.

At Overture Yorktown in Lombard, Illinois, there are 21 unit options, yet the size range is not terribly different from Crescent, going from 769 square feet for a 1-bedroom/1-bath up to 1,327 square feet for 2-bedroom/2-bath and a den.

Amenities and common areas

The Crescent also offers great lessons for new entrants about how form follows function with an active adult community’s amenities.

Like all active adult apartment products, the four-story Crescent from New Albany, Ohio-based Wallick Communities is amenity-rich, with the amenities tied to the act of living in the building itself. The community facilitates socialization and physical movement by giving residents a reason to visit each floor.

The typical first floor includes a public dining room and living room. Outdoor spaces are very important to the active adult customer, as is the opportunity to entertain, so both the dining room and living room will open to a patio, giving residents easy access to outdoors and creating a movement flow for events. The living room is a multi-use space, functioning as both a lounge area — with a fireplace and portable bar — and a seminar space for educational and cultural events.

Photography by Ray Cavicchio | Courtesy of Perkins Eastman

The dining room also offers flexibility of lifestyle, with a bar, adjustable seating and a coffee station.

Upper level floors will have a mix of social- and wellness-driven amenities. The 2nd floor has the associate lounge and crafts room, the 3rd floor has a pair of exercise rooms, the 4th floor includes an art room and beauty salon.

“The idea is to create different opportunities for interaction on each floor,” says Michael Martin, partner at RLPS Architects, which designed the Crescent. “The owner did not want every floor to be the same. They want to create a sense of community.”

In terms of public spaces, the major difference between active adult apartments and IL is the lack of a commercial kitchen; Fannie Mae, for instance, notes that as active adult’s distinguishing physical quality compared to IL.

Regardless, the focus on using the amenity set and common areas to create community and enhance resident wellness is one shared by many active adult operators. Here is how these will look at the Passco-Avenida communities in Palm Desert, California, and Germantown, Tennessee, which both broke ground in September 2019.

A look at amenity offerings and common areas in active adult, from Passco-Avenida


Another draw for senior housing: staffing. While independent living communities can charge higher rents than active adult, they also carry the challenges of massive staffing. The Aviva 55 active adult brand from Lloyd Jones LLC opens its first property in January 2020. The properties will be three to four stories at 160 to 200 units, and will require about six staff members.

Chairman and CEO Chris Finlay views the low staffing as one of the key benefits to active adult — he notes that a 200-unit AL would have “at least” 100 staff members.

“That’s the key element there: your overhead,” Finlay says. “These things are run on a staffing profile of a typical multifamily, with the only exception that you’re going to have a health-and-wellness coordinator and an activities coordinator. … That’s why we think this strategy is so terrific.”

Another key figure driving senior housing into active adult is the operating margin. Matthew Tarpley, a vice president in the New York office of lender Hammond Hanlon Camp LLC, says that 15 to 25% of his portfolio is active adult, a steep rise in the past 36 months. According to “The State of Seniors Housing,” the operating margin for IL in 2016 was 47 percent. Tarpley estimates the margin in active adult to be 4-9 percent higher than that.

“You don’t have the services and those costs associated with these facilities that you do the IL,” Tarpley says. “That being said, (active adult) will certainly trend closer to multifamily margins than it will IL, but it’s all dependent on the amenity set and the services that are offered and the age of the resident.”

The Players

Photo courtesy of Greystar Overture Sugar Land

The story of Passco Companies and its hiring of Carey Levy is a valuable example of how both senior housing and multifamily have strengths and weaknesses in the active adult space.

The multifamily operators are best with the construction and the building operations, while the senior housing operators excel in creating the community experiences that young seniors want.

Despite the cultural disadvantage compared to senior housing operators, multifamily developers still have great success in active adult, and are pursuing it in bunches. While there are no concrete market numbers, one of the key leaders in the space is Greystar with its Overture brand. According to its website, Greystar has 39 communities that are either now open, in pre-lease or coming in 2020.

The money is big, with some companies making investments of hundreds of millions of dollars, or even into the billions. In April 2019, the Atlanta-based Holbrook outlined a $1 billion development pipeline focused on active adult, and they are selling off their traditional care continuum senior housing to fund it.

Specifically, they have seven Holbrook-branded active adult projects under construction or development in three states, which is one third of their pipeline plan. They sold four AL and IL communities and 14 AL triple-net leases.

“We have recycled all of our cash in pure-play assisted living except for three … properties,” chairman Al Holbrook told SHN at the time. “We’re moving everything toward the Holbrook product line.”

The interesting thing to me is that the average length of stay in an age-restricted active adult rental project is seven years. That means that at 82, there is a big group of the population doing something else.”

— Dan Cinelli, Architect, Principal and Board Director, Perkins Eastman

In July 2019, Avenida Partners announced an annual planning pipeline of $200 million for the next five years. It currently has active adult communities in Colorado, Oklahoma and Tennessee, with three more communities under construction, including the communities with Passco, and is now exploring development opportunities across a broad swath of states and metro areas.

Capitol Seniors Housing offers Siena Luxury Residences in Cinnaminson, New Jersey, with two- and three-bedroom layouts. The company remains high on active adult despite halting pursuit of three projects after realizing that high construction costs would have nearly doubled their initial rent estimates.

And then there is Greystar’s Overture brand, which has swelled the past four years to its current dominant stature. The Carlyle Group is among its investors, and itself has 15 stabilized communities.

“You have to be patient on the lease-up, but once you get (the communities) full, they stay full,” Crowe said at NIC. “It’s a very stable asset class, especially when adjusted for risk.”

But the success of multifamily developers has only emboldened senior housing. The SHN active adult survey showed just how strong the industry’s interest is in active adult, and just how confident senior housing pros are in their ability to deliver it, with 64% of respondents believing that senior housing is best equipped of any industry to develop active adult.

Still, 19% of respondents believe that active adult is best in collaboration between senior housing and multifamily. Cinelli views senior living’s value in active adult as the ability to extend each resident’s time in the community.

“The interesting thing to me is that the average length of stay in an age-restricted active adult rental project is seven years,” he says, adding that he estimates move-in age as 75. “That means that at 82, there is a big group of the population doing something else. One of the things we said to (a developer partner) is, ‘Is there a way that based on our knowledge of senior living, not multifamily, that we could move that needle for you?’”

“The interesting thing to me is that the average length of stay in an age-restricted active adult rental project is seven years,” he says, adding that he estimates move-in age as 75. “That means that at 82, there is a big group of the population doing something else. One of the things we said to (a developer partner) is, ‘Is there a way that based on our knowledge of senior living, not multifamily, that we could move that needle for you?’”

Another senior housing operator moving the needle is Minneapolis-based non-profit Ebenezer Senior Living, whose active adult offering includes the 48-unit Glen Oaks in Clear Lake, Iowa, which opened October 5, 2019.

As a third-party manager, Ebenezer worked with multifamily developer OneVision on Glen Oaks, providing “tweaks” that have helped OneVision deliver a product to which the region was unaccustomed, Ebenezer vice president of new business development Susan Farr says.

Farr sees three main tweaks that the standard multifamily apartment complex — particularly those aimed at millennials — require to be set up for the 55+ market.

First, she recommends creating a handbook that operators can use to help residents when their health changes, such as tips on how to transition into and out of short-term care facilities.perhaps increase, their social lives.

Second, she recommends including more storage units and larger community rooms for entertaining, since this is a cohort that is downsizing in space yet not always in possessions, and still wishes to continue, or perhaps increase, their social lives.

Third, resources for typical living tasks, such as dry cleaning and transportation. The tweaks are designed to allow residents to age in place, and feel like they are not losing only the responsibilities of homeownership, not the benefits. And they are designed to help multifamily developers succeed.

“I think a developer is going to say, ‘Why would I talk to Ebenezer?’ They’re going to think ‘old, stodgy, health care,’ Farr says. “And I would say exactly the opposite. I would say, ‘Bring it on … and let us help you with a few tweaks here and there to make it more marketable.”

The buyers

Add it all up, and it’s no wonder that active adult is the hottest senior housing segment among investors in 2019. In this year’s Senior Housing Outlook Report from SHN and Hunt Real Estate Capital, active adult trailed only independent living as the most attractive senior housing type in 2019.

The 2019 “Senior Housing Market Insight” report from CBRE again shows the booming investor interest in active adult. Four years ago, only 7.7% of seniors housing investors polled selected active adult as the best housing segment for investment. This year, that figure tripled, up to 21.7%.

Driving that interest are cap rates in the 5-6% range, with more buyer interest for each property than multifamily. The buyers come from all over, Levy says: REITs, senior health care funds and general qualified buyers and investors.

Hypothetically senior living operators could collaborate with multifamily until stabilization triggers a buy agreement, but sources for this report said that they are building to own.

While both sides seem to view collaboration as a positive, senior living operators looking to enter active adult might ultimately have to make the leap themselves. The opportunity, undoubtedly, will be there for those who can take advantage.

Active adult is among the hottest senior housing investment opportunities of 2019

In the 2019 Senior Housing Outlook Report from SHN and Hunt Real Estate Capital, respondents were asked, “What will be the most attractive category of senior housing in which to invest in 2019?”

Their responses showed active adult’s popularity:

The future

Speculation over the next phase of active adult rental is rampant, if for no other reason than the product’s massive potential for aging in place. For many boomers, aging in place, no matter the location, is a major driver of their housing decisions once they become empty-nesters; a 2019 study from Chase and Pulsenomics showed that 52% of baby boomers have no plans to ever move from their current homes.

Active adult rental is one of the tools senior housing has in its toolbox to help young boomers age in place and remain under their umbrella. And within active adult are a few tools. There is the pipeline method, like what Ecumen is doing. There is the build-to-adapt method, where a developer builds an active adult community in a way that makes it ripe for a transition into an IL, either on a unit-by-unit basis — with larger entryways, for instance, or building units that include space for easy-to-add grab bars — or as a community, by adding a commercial kitchen.

A third strategy is one that Lloyd Jones is employing with its Aviva 55 brand, which is to facilitate home health care services to residents on an a la carte basis, Finlay says.

“The idea there is to keep people in place and help them age in place,” he says. “Hopefully they’re there forever.”

No matter the strategy, there is great potential for active adult to solve multiple problems in senior housing. Whether it is as a middle market solution, a method for bringing young boomers back into the senior housing fold or simply building additional revenue lines, active adult has a future in the senior housing journey.

“The debt is no problem and the equity is no problem,” Tarpley says. “There is no shortage in capital. It’s not a secret. All the smart money knows this is where the business is going and this is where they want to be. So from a debt and equity perspective, there is a huge amount of capital going after this specific class. These guys are smart. And the smart money is all over this.”

The idea there is to keep people in place and help them age in place (in active adult). Hopefully they’re there forever.

Chris Finlay, Chairman and CEO
Lloyd Jones LLC