The Covid-19 pandemic continues to take a toll on the senior living industry, but for some active adult providers, the impact has been less severe — and they are hoping that translates into a surge of demand once case counts dwindle.
The resiliency of active adult, in terms of move-in velocity and sales leads, complicates the notion that needs-based demand has held up better and will return more quickly to the sector. And if rental active adult communities weather the pandemic well, recent investor interest in the sector could become even hotter.
There are various factors that combine to explain active adult’s performance. The product type tends to offer rates much lower than independent living communities, which can be a selling point amid an economic downturn caused by a pandemic.
Active adult residents are also typically more free to have visitors as they please, with many communities having private entrances in units. For older adults and their families, that distinction alone might be the deciding factor regarding whether to move in.
And while active adult communities don’t offer the same robust slate of services as independent living, many do still offer certain concierge services, resort-style amenities and some activities programming.
Whatever the reason, many active adult communities are performing relatively better than the more traditional independent living peers in their markets. And that has given confidence to operators in the space, including active adult newcomer Vitality Living, that demand will remain higher in the months and years ahead as aging baby boomers look to downsize.
“[Active adult] gives you a lot more freedom and flexibility, both in the lifestyle and financially, and I think that’s attractive,” Vitality Living Founder and CEO Chris Guay told Senior Housing News.
Active adult momentum
Throughout 2020, many active adult providers reported stronger census and higher move-in rates than their senior living counterparts. And that is evidenced in new data from Sherpa, a St. Louis-based firm offering a sales enablement platform, providing methodology, CRM technology and sales analytics to the senior living industry.
Active adult communities tracked by Sherpa saw an average of about four move-ins per month in 2020, with a tour-to-move-in ratio of about 30%, according to the latest data. By comparison, independent living communities also tracked by the firm saw about two move-ins per month in 2020, with a tour-to-move-in ratio of about 17%.
Independent living communities saw more new leads per month in 2020, averaging 30 versus the active adult sectors’ 20, according to the data. But active adult communities spent more time on average in the “selling zone” with leads at an average of three hours and 45 minutes, versus one hour and 30 minutes for independent living communities.
And market conditions have seemingly become more favorable for active adult communities in more recent times, with move-ins trending closer to an average of 5.7 per month for active adult communities in the past six months.
Many of Sherpa’s clients in the active adult space are employing certain sales tactics to meet potential customers where they are now, such as porch visits, according to Sherpa President and Co-Founder Alex Fisher. Many of the firm’s clients also say that new residents are attracted to the product type’s lower acuity profile and its freedom of access for visitors.
“Prospects are shopping independent living and … finding that the population looks more like assisted living, and that it looks more like a health care play,” Fisher told SHN. “They’re drawn towards active adult because of the vibrancy that it promises.”
Active adult developers have previously said the pandemic is validating their market selection and development strategies and accelerating senior living trends that bode well for future demand.
Investors became more interested in active adult communities in the years leading up to the pandemic, but SHN’s recent 2021 Outlook survey with Lument suggests that interest may have shifted to the needs-based side of the continuum during the pandemic, even as the product type has held its own in the face of Covid-19 pressures.
Still, plenty of real estate players and investors remain bullish on the product type. That includes Livingston Street Capital, a private equity firm focused on commercial real estate that entered the active adult space about two years ago.
Currently, the firm has about 1,000 active adult and independent living units spread across six communities in addition to its industrial and office holdings. But the company is looking to grow that number in the months and years to come through acquisitions in primary and secondary markets throughout the U.S.
“We anticipate that robust demand for active adult and independent living will continue in the coming years,” Livingston Founder and CEO Peter Scola told Senior Housing News. “Coming out of the pandemic, we believe we’ll see an even deeper and more widespread focus on health, wellness and overall wellbeing. We anticipate the need for community balanced with independence will be stronger than ever.”
And no matter what happens in the coming months, active adult development is sure to remain a top trend in senior housing in 2021 and beyond.
Pivoting to active adult
Senior living providers have taken note of these favorable trends, and are preparing by growing and evolving their active adult offerings.
Vitality Living, for instance, is expanding its active adult portfolio with two communities: an active adult property with 86 patio homes that opened its first phase last year in Madison, Georgia; and a project to redevelop the Copeland Tower Suites hotel in Metairie, Louisiana, into Copeland Tower Living, an active adult community with 95 one-bedroom suites.
In doing so, the company is focused on catering to the unique preferences of the incoming baby boomer generation.
“There’s going to be a large portion of that population that wants to downsize and get into a more maintenance-free type of living situation,” Guay said. “They’re going to look for an option that is more affordable, but one where they can still have a great lifestyle. So, we feel really good about this space.”
Part of Guay’s thinking is that boomers will keep working even as they reach ages that likely would have meant retirement in the past. And at the same time, he believes boomers will want to live in vibrant communities with people who are around their age.
“Their options are either traditional apartments where maybe you don’t have the amenities and/or you’re surrounded by much younger people,” Guay said. “Or they [can] spend a little more but get higher-end, tailor-fit amenities, and be able to be around people that they can really socialize with.”
The provider’s future active adult communities will carry the Vitality brand name, but will exist in a separate vertical from its traditional senior living communities, Guay said.
“If we mix it too much to our assisted living or independent, you may not attract that really versatile [group of residents],” Guay said. “I want to treat these as a completely different product.”
Another example of a senior living provider pivoting to active adult is St. Louis-based St. Andrew’s Resources for Seniors System, a senior housing and care nonprofit with 16 communities in the Show Me State. That number will soon grow to 17 with the opening of a $23 million active adult community currently under construction next to a skilled nursing and memory care facility that St. Andrew’s operates in Eureka, Missouri.
The community, Summerville of St. Andrew’s, is planned to have 96 one- and two-bedroom units spread across 24 fourplex cottages and arranged in pocket neighborhoods built around a central common space with bocce ball, pickleball courts, gazebos and fire pits.
In coming up with the design for Summerville of St. Andrew’s, the nonprofit followed the example of Rose Villa, a life plan community in Portland, Oregon, according to Mary Alice Ryan, president and CEO of St. Andrew’s Resources for Seniors System. In particular, the St. Louis nonprofit’s leader was drawn to the fact that Rose Villa’s pocket neighborhoods were built on a slope similar to the one at the St. Andrew’s of Summerville site.
And, Ryan believes the pocket neighborhood concept is well-positioned to attract baby boomers in the years to come. That’s why Summerville is also slated to include other perks to attract the boomers, such as health tracking services, telehealth, remote entry and an in-house television channel. The community is also planned to have a neighborhood clubhouse that will double as a social hub and a dining venue, with fare from about a dozen local restaurants.
“Each generation that I have worked with has a different outlook on life,” Ryan told SHN. “The generation that is coming at us is the boomer generation, who want their independence, want to have fun, love socialization, love being fit, want to do all they can — and we believe they’re also still going to work longer.”
Columbus, Ohio-based Treplus Communities is another example of a company that pivoted to active adult in anticipation of future demand. The company focused solely on multifamily development until 2014, when its leaders decided to enter the active adult space, according to Managing Partner Jane Arthur Roslovic.
“We’ve got a lot of baby boomers, they want to downsize, they don’t want to necessarily pour all of their extra capital into maintaining their home … and they want that sense of community,” Roslovic told SHN. “They don’t necessarily want to live with the millennials, but they want to rent, and I think we are creating communities where they really feel like they can age in place and enjoy one another.”
Today, Treplus has three active adult communities open in Ohio, and another five that are in various stages of development or construction throughout the state. The company’s first three properties all have fewer than 100 units, but future projects will have closer to 120.
A typical Treplus community is a neighborhood of single-story, ranch-style rental homes outfitted with universal design principles, each with a private entrance and an attached garage. Residents have access to amenities such as fitness centers; bourbon and billiards rooms with liquor lockers and televisions; and a professional office for residents who are still working.
Roslovic is heartened by how the property type has performed during the Covid-19 pandemic. Because each dwelling has private entrances, residents don’t have to travel through shared corridors to enter or leave, reducing their potential exposure. Residents also have more control over whether they have visitors — a stark difference from many more traditional senior living communities, where residents have had to forego most social visits and sequester in their rooms for the better part of a year.
Active adult communities also come with fewer services than traditional senior living communities, and thus have lower rates. For instance, Treplus’ monthly rates range between $1,900 and $2,600. And that is attractive to prospective residents who might also be thinking of moving into independent living, which carries a higher monthly price tag in the markets where Treplus operates, according to Roslovic.
Despite having fewer services to offer than independent living communities, active adult properties still can offer what is often thought to be among the core offerings of senior living: socialization. For baby boomers and their adult children, that is a crucial selling point.
Roslovic pointed to the testimony of a couple who moved into a Treplus community after 30 years of living in a residential neighborhood as an example of what baby boomers value.
“They talk about how they lived in their neighborhood for 30 years, and that they know more people by name where they live now,” Roslovic said. “That is vital to baby boomers … and that’s why I think active adult is going to be really important. “