Key Takeaways
This report offers a comprehensive view of mixed-use development in senior living. Readers will learn:
- The difference between vertical, horizontal, and master plan mixed-use, and how senior living providers can successfully execute each model
- The strategies senior living providers can use to take advantage of the growing opportunities in mixed-use development
- The risks and rewards of senior living providers taking on landlord responsibilities
- The most creative approaches providers are taking to mixed-use, and how they are using mixed-use to build a product that delivers top care and as strong business
Don’t box them in.
These four words are the perfect summation of today’s changing face of senior living mixed-use development.
More than ever before, seniors today seek innovative housing models for their golden years, ones that allow them to stay connected to an outside, intergenerational community. They want walkable access to retail, entertainment and health care. They want to stay close to their loved ones. They want to remain in or near the city or town that they’ve called home for much of their lives.
In short, their lifestyle needs and desires are influencing the changes in mixed-use development in senior living. While mixed-use development takes many forms, in senior living it means a structure or group of co-located structures that combine senior housing options with one or more complementary elements.
As such, “don’t box them in” applies to senior living operators too. Today’s mixed-use senior living developments range from single buildings with ground-floor retail to master planned communities functioning as independent towns. These developments are found in city centers, as well as suburbs and even the countryside.
And the element that makes a community “mixed-use” is changing too. Along with the traditional retail and restaurants, developers are getting creative, tying senior living to other property types, including hospitals, pharmacies, hotels, preschools and libraries.
Whether a project is driven by land availability, structure design, municipality requirements, resident lifestyle needs or anything else, the benefits of mixed-use development in senior living are becoming more and more obvious to all involved parties.
Senior residents like mixed-use for the access to shopping, retail and health care, social integration and walkability. Business owners like it because it brings a built-in consumer base. Municipalities like it because seniors create little impact on high-traffic public use areas such as roads and schools. Senior living providers like it because adding an mixed-use element can help a project take flight.
With a growing senior population and one that increasingly wants to stay involved in activities and social groups, there have never been more ways for senior living providers to capitalize on the benefits of mixed-use development.
They just have to think outside the box.
Why Mixed-Use Senior Living is on the Rise, and why it works
Mixed-use development in senior living takes many forms, but they all share an umbrella definition: a senior living community that includes offerings that are open to both residents and members of the surrounding community.
In interviews for this report with close to 20 senior living operators, developers, architects and property managers, we identified three types of developments referred to as “mixed-use.”
The first is “vertical mixed-use.” This is perhaps the most traditional and what most people think of when they think of “mixed-use” — a single structure, often a tower, with retail or dining on the ground floor. The residential areas are above that, with a mix of care levels. These single structures often come with below-ground parking, and are often located in city centers, such as Chicago, Manhattan and Mexico City.
The second is “horizontal mixed-use.” These are mall-like sites with multiple plots run by multiple operators, including an area for senior living. These sites take the benefits of walkability and accessible shopping and build out, rather than up.
The third are master planned communities that situate senior living within vast acreage designed to create an inclusive living experience. These are most common in regions with vast swaths of undeveloped land, including California, Florida and Texas.
According to experts, we are in the early days of mixed-use senior living. This model of development is on the rise in its multiple forms for multiple reasons. The development of vertical mixed-use senior living, particularly in urban centers, is increasing for three main reasons:
More municipalities are requiring that city developments include senior living
Limited city space puts land at a premium, and the mixed-use offering is both more attractive to cities and can help developers pay for the acquisition
The multiple uses, walkability and city living are strong motivating factors for seniors preparing to move
There is overlap between the factors increasing the three models of mixed-use senior living, while the biggest key to success in each is the multiple synergies. No matter the size, location or template, the modern mixed-use development in senior living must benefit all involved parties: residents, senior living providers, businesses and the surrounding community.
“I think anyone in this business tends to be mission-oriented, but they are mission-oriented with a bottom line,” says Leslie Moldow, design principal at architecture firm Perkins Eastman. “I think mixed-use supports a triple bottom line: it supports the financial viability of a project, the social viability of a project and the environmental viability of a project.”
Benefits for residents
No matter the type of mixed-use, residents need the same things: easy access to shopping and entertainment that keeps them connected to a community, all with the same standard of care they would get in any top senior living environment.
In 2017, Toledo, Ohio-based real estate investment trust Welltower, Inc., published “Aging In Cities Survey,” a study of 3,000 adults of all ages living in 10 large U.S. cities to explore “how these urbanites think about retirement and aging issues — both for themselves and their own city.”
According to the survey, the most important activity or lifestyle need for persons over the age of 80 is high quality health care. This was followed by:
- Places to gather with friends, family and grandchildren
- Access to scenic walkways, a waterfront or nature area
- Shopping
- Outdoor recreation
- Cultural experiences
“Our number one goal is to provide our operating partners and their residents with the best possible setting for care that is available,” says John Olympitis, vice president of business development at Welltower.
Senior living providers with communities as different as Chinese cultural community Aegis Gardens of Newcastle or the master planned countryside hamlets of Serenbe outside Atlanta talk about the positive impact for seniors of an active lifestyle, ideally one that is intergenerational. Mixed-use senior living gives its residents a daily foundation that is both active and social.
“If you look at remaining healthy at any age … there are two key components: connecting to nature, which has a huge reset for anything mental and how you feel, and connecting to one another as individuals, and we have been building places for the last several decades that separates us from both,” says Steve Nygren, who in 2004 founded Serenbe, a 1,400-acre master plan community with more than 600 residents situated within 40,000 acres of woodland.
“We’ve been building self-imposed prisons for the last several decades, and we wonder why we are depressed,” Nygren says. “And we tend to do the same thing with senior housing. All of these gated communities — it’s separating them from society.”
There’s no question that if you’re sitting opposite the top hospital in the country, you’ve got referral sources coming from the medical community.
Patricia Will, Co-Founder and CEO, Belmont Village
Benefits for senior living providers
Some senior living providers or real estate operators specifically create mixed-use communities for the benefits they provide. Others want to develop at a certain site, and either municipal requirements or building design lead to the mixed-use.
No matter the reason, senior living providers are seeing the mixed-use element delivering a positive impact on occupancy rates.
“I think our location is definitely a selling point because of the proximity to the Botanic Garden, the proximity to the Kohl Children’s Museum, the various restaurants, the shopping, Orchard Mall, everything,” says Steve Samson, community relations manager of Vi at The Glen, a continuing care retirement community located in master plan community The Glen in the Chicago suburb of Glenview, Illinois.
Vi at The Glen is part of Vi, a Chicago-based senior living operator with 10 continuing care retirement communities across the U.S. At the time of this report, Vi occupancy rates ranged from the 80s to high 90s. Vi at The Glen is 98% occupied. In the Bay Area, horizontal-style mixed-use IL, AL and memory care community Atria at Foster Square opened in 2017 and is outperforming its pro forma in term of both units rented and rental price.
In Chicago, Houston-based Belmont Village Senior Living has a new mid-rise community coming in the summer of 2019 with IL, AL and memory care — that community is already taking deposits. The Chicago site is modeled after Belmont Village’s Mexico City community, a 20-story, 130-unit AL and memory care site that opened in 2017 and features retail, a pharmacy, a hotel and a top hospital across the street.
“I think it helps,” Belmont Village co-founder and CEO Patricia Will says about mixed-use development on occupancy rates. “There’s no question that if you’re sitting opposite the top hospital in the country, you’ve got referral sources coming from the medical community.”
There are also business advantages for developers. In 2013, community advocacy group Smart Growth America studied what it calls smart-growth development, which includes a mix of land uses. Its findings included three key economic benefits:
- One-third less cost for upfront infrastructure
- An average savings to municipalities of 10 percent on ongoing delivery of services
- Ten times more tax revenue generated per acre compared to conventional suburban development
“Whether by saving money on upfront infrastructure; reducing the cost of ongoing services like fire, police and ambulance; or by generating greater tax revenues in years to come, community after community has found that smart growth development would benefit their overall financial health,” the survey concludes.
Benefits for business owners
While senior living residents benefit from the easy access to business, the value goes both ways. Whether the business is health care, dining, retail or even a library, businesses joining forces with senior living benefit from the senior populations they serve.
“In many contexts, the largest customers of physicians are seniors,” Will says. “So you are facilitating proximity to a medical office tower that is populated by specialists that seniors would be seeing.”
After retail and dining, medical and health care offerings are arguably the most popular and prevalent mixed-use elements. While Belmont Village in Mexico City is across the street from a hospital, American House Grosse Pointe at Cottage in suburban Detroit is located within Henry Ford Health System’s Cottage Hospital in which senior living operator American House Senior Living Communities purchased two floors of the building in a condominium structure, developing the floors into independent living, assisted living and memory care apartments.
About 800 miles away in a terrifically different model, the businesses in Serenbe are seeing the same benefits. One notable example is its theater, which has a $1.3 million budget in 2017 driven predominantly from ticket sales from non-residents.
And according to one study, mixed-use development can have a positive impact on rents for businesses. In 2009, NAIOP Research Foundation’s study concluded that “office space in a mixed-use development can command a statistically significant, positive premium in select markets,” showing increases per square foot in Dallas ($1.99), Charlotte ($1.82) and Nashville ($1.79).
Strategies for Vertical Mixed-Use
Vertical mixed-use” refers to a single structure that includes both residential units and businesses. The term “vertical” comes from its most common form, a tower, but as we’ll see with Aegis Gardens of Newcastle, a shorter, wider building is also “vertical mixed-use” by virtue of its single site.
Vertical mixed-use senior living communities are most popular in urban areas, where the vertical structure is used to fit easily into an urban core. Their popularity also ties into the ways in which they serve their residents. For example, the concept of “aging in place” is nothing new, but vertical mixed-use is changing the meaning of “place.”
“We hear a lot in our business about aging-in-place, and that means less and less the home in which you raised your family and more and more the city you’ve been in,” Olympitis says.
According to Welltower’s 2017 study, seven out of 10 city dwellers and eight out of 10 baby boomers want to live in their current city when they are 80 or more years old. Even the least popular city in that survey, New York, has 65% of respondents wanting to stay.
This desire to stay in one’s city is a major driving factor for vertical mixed-use. The benefits to an urban lifestyle are numerous. In its research and development efforts around urban mixed-use for senior living, KTGY Architecture + Planning has identified 11 such benefits:
- Walkable neighborhoods
- Car independence
- Access to public transportation
- Proximity to entertainment
- Dining
- Shopping
- Access to quality health care
- Amenities in the building
- Less property maintenance
- Proximity to family and friends
- Opportunities for community involvement
Research by KTGY’s R+D studio — KTGY’s research and development arm — has led to a prototype called “Next Steps,” a high-rise that offers 14 floors of independent living on top, three assisted living floors in the middle, three memory care floors toward the bottom. These are supported by two levels of retail, a pet spa, daycare and parking, all of which is open to the public as well as the residents.
“That is an attempt to show people an opportunity of how you can do exactly the thing we are talking about,” says KTGY principal Manny Gonzalez. “You would have a built-in user’s market just with the residents who live in the building.”
With the exception of one active adult, 55+ location, all of the communities or developments profiled in this report offer care services. But two of the communities — both vertical mixed-use — go one step farther in delivering care to residents, because the mixed-use element is care itself.
That is the case in Belmont Village Santa Fe in Mexico City, which is connected via a skybridge to a hospital, and American House Grosse Pointe at Cottage outside Detroit, which fuses senior living with a hospital.
These offerings are in line with one of the Welltower study’s most crucial findings: access to high quality health care is the number one priority for people choosing where they will live once they turn 80. In one way or another, each of these vertical mixed-use communities deliver on the care component.
A skybridge, a hospital, a hotel and senior housing
Lesson: think creatively to increase walkability and deliver care
CASE STUDY:
Belmont Village Santa Fe
Location: Mexico City
Opened: May 2017
Stories: 20
Units: 133 total — 67 assisted living, 32 memory care, 34 separate memory program
Ownership arrangement: Belmont Village Senior Living owns the building in a partnership with investors in Mexico City, and acts as landlord, collecting rent checks from business tenants.
Care operator: Belmont Village Senior Living
Architect: Alberto Garcia Lascurain
Tenants: Full service restaurant, high-end coffee shop, pharmacy, convenient store, Hyatt Hotels, parking garage, medical offices
Occupancy: About 33%, as it is still in the fill-up stage.
Construction cost: $55 million
Reason for mixed-use:
When Houston-based senior housing owner and operator Belmont Village Senior Living prepared to open a $55 million mixed-use assisted living and memory care tower in Mexico City, Belmont Village CEO Patricia Will saw a very small piece of acreage with room to build up, not out.
The mixed-use approach made sense due to the city’s population and land density.
“It made sense if you can conquer that [density] problem to put more than one use on the land,” Will says.
The Mexico City investors found the land. Belmont Village took over after that. Will and her team created Belmont Village Santa Fe (BVSF), which is mixed-use in two ways. First, in its own building it offers retail and restaurants on the ground floor, 11 stories of senior housing, an eight-story Hyatt Hotel above the senior housing and underground parking. All of this sits on just an acre and a half of land.
Second, across the street from BVSF is ABC Medical Center — the top hospital in Mexico City — along with a medical school. While the hospital system does not own nor control the land, they were consulted about what they felt the development most needed. The connection between the hospital’s needs and that of the development are physical too: the Hyatt and the hospital are connected via a skybridge.
“All of these uses work incredibly well together,” Will says. The hospital serves the senior housing and vice-versa, while the Hyatt gives family members of the senior housing a place to stay while visiting. Belmont Village Senior Living owns the building in a partnership with local investors in Mexico City and serves as landlords to the retail, hotel and parking, collecting rent checks on all of them.
“It demonstrates that in dense urban markets where it is difficult to find and acquire land, you can combine uses which helps you pay for the land, but also create synergies that would probably not be there if they were not all attached,” Will says.
Biggest challenge in launch:
Other than land acquisition and design, the biggest challenge was that the building isn’t just new — the entire idea is new. Belmont Village is working on a similar project in Chicago, and though that community is scheduled to open in the summer of 2019 it is already taking deposits.
Mixed-use senior living is a known commodity in Chicago. Not so in Mexico City.
“So we are both establishing a mixed-use project and a category,” Will says.
The upside for Belmont Village is that the Mexico City project is paving the way for more work. The company is also at work developing its second mixed-use senior living product in Mexico City.
“I think that once people see and understand what the product is, we will have less of a burden to both create the project and the category,” Will says. “The demand is there, but it’s a longer sell because people don’t know what it is.”
What new entrants should watch out for:
Mixed-use projects are difficult, because all of the players have to make compromises on their piece to ensure that the total package works — compromises you might not have to make in a standalone.
“Unless you have a group of sophisticated players who are willing to give up something for the sake of the whole, and listen to each other, it can be a very difficult process,” Will says.
Will advises providers creating vertical mixed-use with businesses on upper floors — like the Hyatt — to build separate elevator systems with separate lobbies. That way, the senior living residents have their space separate from the non-residents.
Senior living as hospital tenant
Lesson: when health care and senior living team up, care — and business — thrive
CASE STUDY:
American House Grosse Pointe at Cottage
Location: Grosse Pointe Farms, Michigan
Opened: 2015
Stories: 3 (ground floor hospital, top two floors senior living)
Units: 40 independent living, 29 assisted living and 15 memory care over two floors
Ownership arrangement: Henry Ford Health System Cottage Hospital owns the building and sold two floors in a condominium arrangement to American House Senior Living Communities, which developed those floors for senior living.
Care operator: American House Senior Living Communities
Developer: REDICO
Designer: Innerspace Design, Inc.
Architect: Hobbs and Black Architects, Inc.
Construction Manager: T.H. Marsh Construction
Mixed-use elements: The outpatient hospital
Occupancy: 98% — American House’s portfolio averages just above 92%
Construction cost: undisclosed
Reason for mixed-use:
When the model for the Henry Ford Health System Cottage Hospital became untenable, American House was there to help. The hospital, located about 10 miles northeast of Detroit, was shifting from an inpatient care model to more outpatient care.
This left the hospital with significant operational losses — they had too many beds. They reached out to nearby American House to find a solution. The two entities partnered up: American House purchased two floors in the hospital in a condominium arrangement and converted one floor to assisted living and the other to memory care.
“Our residents are very pleased because those services are right there on site,” says American House CEO Dale Watchowski. “What we’ve found is that our residents, if they weren’t using physicians of Henry Ford, they’ve shifted to Henry Ford as their health care provider.”
The condominium structure is American House’s preferred arrangement for mixed-use.
“We’re very pleased with the form of ownership,” Watchowski says. “We are in the senior housing business, and we do that well. Henry Ford is in the business of health care and they do that well. We can live and benefit synergistically through the relationship.”
What new entrants should watch out for:
Watchowski is not just CEO of American House, but also CEO, COO and president of commercial real estate developer REDICO. While some senior housing providers get tripped up by the other uses in mixed-use, Watchowski does not.
Therefore he sees several risks for new entrants. The first risk area is an entry into commercial real estate, specifically the impact that the rapidly evolving business of health care has on architecture, and the challenges of property management. The second risk is not knowing how to capitalize on the opportunity as an investor.
“The reason I decided to pursue mixed-use development is because I am a bit of a hybrid,” Watchowski says. “REDICO provides commercial real estate services and has done so for 50 years, and American House provides operating experience and has done so for 40 years. Without the history in knowing how each of those respective asset classes performs, it might be a scary prospect to embark on a project that would include a mixture of these uses.”
Chinese culture with an all-ages offering
Lesson: serve an affinity group with intergenerational elements to create a unique living experience
CASE STUDY:
Aegis Gardens at Newcastle
Location: Newcastle, Washington
Opened: February 2018
Stories: 5
Units: 131, all assisted living
Ownership arrangement: Aegis Living owns the building and acts as landlord, collecting rent checks from business tenants.
Care operator: Aegis Living
Architect: Ankrom Moisan
Mixed-use elements: cultural center, dining, tea room, spa, lecture area with a preschool coming
Occupancy: about 22% and “growing quickly”
Construction cost: $52 million
Reason for mixed-use:
Dwyane Clark serves a community, though his is not strictly geographic. Rather, as chairman and CEO of Bellevue, Washington-based senior living provider Aegis Living, Clark created Aegis Gardens of Newcastle to serve a Chinese community that Clark says includes nearly 600,000 people in Seattle and the nearby cities of Portland, Oregon, and Vancouver, British Columbia.
“We didn’t want to build a typical retirement home,” Clark says about his 131-unit assisted living facility in Newcastle, Washington. “We wanted to build the epicenter of Chinese life in the Northwest.”
The community, which opened in February of 2018, is a five-story mixed-use building covering 128,521 square feet. Clark developed the project with a goal of creating an intergenerational community of health care, culture and education. To that end, along with its more traditional dining, tea room and spa offerings, Aegis Gardens includes a cultural center and lecture area, with a preschool slated to open in September.
“We have 48-year-old people coming to our lectures,” he says. “Because of that, our 83-year-old residents feel like they are mainstreamed into life. It doesn’t feel like an old folks’ home. It’s much more lively.”
How cultural mixed-use works:
While the on-site dining, including one of a chain of nonprofit cafes called Queen Bee, gives Aegis a traditional mixed-use feel, its primary mixed-use mission is cultural. The lecture area focuses on topics such as Chinese medicine, longevity, Tai Chi and financial planning.
“My goal was not just to have a cool place for old, Chinese people to come retire,” Clark says. “My goal was to be the center of the Chinese universe.”
That explains not just the upcoming preschool but the business arrangement around it, in which a Seattle-based Chinese agency rents the space for $1 — yes, one dollar — per year.
The social-driven initiative is the result of an experience Clark had with his mother, who suffered from Alzheimer’s. She was involved in a program where Alzheimer’s residents went to elementary schools, and children read to them. The two groups even did something called “slang exchange,” where they would inform the other of the slang from their generation.
Why Clark likes mixed-use:
Unlike the other vertical mixed-use communities in this report, Aegis Gardens of Newcastle is not in an urban center. It wasn’t built with intense land constraints. It was designed exclusively based on Clark’s desires and instincts for what care should be. He adds elements when he sees that they are “programmatically accretive” to the lives of residents.
“A lot of people look at mixed-use as an obstacle,” Clark says. “We look at it as an opportunity.”
One of his next plans is a doggy daycare, that will allow residents to be involved in dogsitting, just as they are given opportunities to interact with the preschoolers.
“Seeing the delight that my mother personally experience in working with these 1st and 2nd graders, there are two things that I am 1000% convinced on,” he says. “Whenever you can put children and elderly together it’s an automatic win, and whenever you can put animals and elderly together it’s an automatic win. Those are two things that are very important and help our residents’ lives.”
Midtown Manhattan senior living
Lesson: find an underserved market and make it your own
CASE STUDY:
The Welltower
Location: Midtown Manhattan
Opening: Early 2020
Stories: 16
Units: 151 total — 82 memory care and 69 assisted living
Ownership arrangement: Welltower, Hines and a 3rd party investor own the building in a joint venture. Welltower and Hines control the building, including the retail.
Care operator: Sunrise Senior Living
Architect: SLCE Architects
Mixed-use elements: Mixed-use retail
Construction cost: $141.7 million
Reason for mixed-use:
In March of 2018, Welltower partnered with international real estate firm Hines in a joint venture called The Welltower, a 16-story development in Midtown Manhattan that will be that area’s first purpose-built assisted living and memory care community. The ground floor is retail. Sunrise Senior Living will manage the residential.
All decisions about the tower were site-specific. On the memory care side, the team “identified a huge gap in supply and demand in Manhattan,” Olympitis says. There were only 70 licensed memory care beds in Manhattan.
“We actively set out to plug that gap between supply and demand and find a site that would be in an excellent location for purpose-built assisted living and memory care,” he says. The Welltower will be the first such purpose-built community in Midtown Manhattan.
“If you think about where the frail and elderly are right now in New York City, a lot of them are getting care in their apartments,” Olympitis says. “There’s not a social benefit to that. There is not a cognitive benefit to that. They are sort of a hidden population.
“Having a beautiful, new building that says ‘Sunrise’ and ‘Welltower’ on it, where millions of people will see it as they go to and from work brings this [elderly] population into the light.”
Assisted living and memory care have really been a suburban product, so there haven’t been a lot of mixed-use. I think we are in the very early days of a trend of developing for these populations in the urban core.
John Olympitis, VP of Business Development, Welltower
Choosing the mixed-use element:
Once they selected the site, they realized that it came with the opportunity for ground-floor retail. They added the retail because it worked for the site.
“I think as you see more and more development in cities across America, urban development will have a mixed-use component because that’s what urban development is,” he says. Welltower, Hines and a 3rd party investor own the building in a joint venture. Welltower and Hines control the building.
The retail provides another revenue stream in the form of rent. Olympitis does not believe that potential mixed-use developers should view that revenue as a driver to build, but rather a benefit based on the site in question. In its mixed-use space, The Welltower will offer retail instead of a full-service public dining option, for instance, because there are already an abundance of restaurants nearby. Premium dining is available for residents.
“I think if we continue to see population trends move into cities and we continue to see that demand filled in seniors housing, by the nature of moving into the urban core, more are going to be mixed-use,” he says. “I think it will become an increasing part of the landscape.”
The affordable senior housing library
Lesson: meet a community’s need and make a community whole
CASE STUDY:
Independence Branch Library
Location: The Independence is one of three library-housing developments under construction in Chicago
Opening: Library will be open by the end of 2018, with the housing available in early 2019
Units: 44 affordable independent living units, including 30 units with rent subsidy
Ownership arrangement: Evergreen Real Estate Group will be the building owner and property manager for the senior living, with the library as a tenant.
Care operator: Evergreen Real Estate Group
Architect: John Ronan Architects
Mixed-use elements: public library
Construction cost: Approximately $23.8 million for the Independence branch
Reason for mixed-use:
On October 30, 2015, the Independence branch of the Chicago Public Library was destroyed in a four-alarm fire. This was a devastating loss for its community — despite floating from location to location, the library had been part of the Chicago Public Library system since 1914.
When community activists began a movement for a new, permanent library, the mayor’s office, library system and Chicago Housing Authority teamed up for a solution that was previously successful in San Francisco: a single structure with 44 units of independent living and a new library. For thirty of the 44 units, rent is calculated as 30% of the tenant’s income, while 14 affordable units have rent set at a fixed level for tenants at 60% of the area’s median income.
Chicago is opening three such projects, with the libraries open for business at the end of 2018 and the housing available in early 2019.
“In many ways, libraries have become a kind of community center,” says David Block, director of development of Evergreen Real Estate, which is building two of the three library-housing projects, including the new Independence library. “That’s why co-locating them with senior housing makes a lot of sense.”
How the project came together:
Along with the mayor’s office, the CHA and the library system, decision makers on these projects included five city aldermen, four banks and the Illinois Housing Development Authority. The library and housing are financed together; once the project is completed, developer Evergreen will be the building owner and property manager for the independent living, with the library as a tenant.
In the case of these co-located libraries, the need for the libraries came first, and the senior living component made the project more attractive to the city, thus creating a benefit for seniors that Block thinks is lost in standalone senior living communities.
“If you have a big, sprawling campus, it may feel more isolating than a mixed-use campus,” he says. That’s because standalone senior living communities create what he calls an “artificial barrier” between the seniors and the rest of the neighborhood.
“Many of the clients or the customers of the library are seniors,” he says. “And for many of these folks, particularly low-income seniors who don’t have cars, it’s a way for them to stay connected, to get access to services, to connect with peers. Having senior housing connected to these buildings really creates a natural constituency for that library.”
You are going to see a demand for [senior] housing, and putting it in mixed-use development is certainly one way to fill that demand.
David Block, Director of Development, Evergreen Real Estate Group
Strategies for Horizontal Mixed-Use
The 2017 Welltower, Inc., mixed-use study, “Aging in Cities Survey,” identified five high priority factors that drive a senior’s choice of where to live, both at age 55 and at 80 and beyond. They are high quality health care, family location, public transportation, a shopping center or mall and a walkable downtown.
Vertical mixed-use certainly delivers on shopping and walkability. But for even greater walkability, developers employ the horizontal template.
“I think that historically, senior living has been thought of as something that … is built on a green field, and is a bit of an isolated development,” says Moldow of Perkins Eastman, designer of Atria at Foster Square. “This next generation of seniors is looking for more walkable, integrated options.”
The data backs it up.
A 2015 study from the University of Utah, “Walkability, Land Use and Physical Activity,” concluded that mixed-use development was a powerful tool to combat the obesity in the United States. While senior living research doesn’t specifically cite obesity, access to areas for exercise and physical activity are key motivators for prospective senior residents.
KTGY’s R&D project “Next Steps” highlights the desire among today’s seniors for walkability and a connection to community. In 2017, senior living referral service A Place For Mom surveyed close to 20,000 senior living consumers about their living preferences; walkability scored very high, with 66% of assisted living respondents calling it at least “somewhat important.” That number jumped up to 82% for independent living respondents.
The horizontal mixed-use model addresses that. These mixed-use communities are multiple plots of land developed in concert, typically under the direction of a master developer, with separate operators for the senior living and other property types. While the vertical mixed-use gives residents lifestyle and activity options within a single building, the horizontal mixed-use encourages them to walk a short distance into a broader community.
Atria at Foster Square of Foster City, California, actually qualifies as both a vertical and a horizontal development. Completed in late 2016, the community is a six-story building with 155 units of independent living, assisted living and memory care, and 21,000 square feet of retail. That makes it vertical.
But it was constructed as part of a 15-acre development upon which are two other housing options, more retail, and town square and an outdoor promenade, all of which neighbors city hall, a library, fire department, senior center, multi-family housing and the Peninsula Jewish Center.
That makes it horizontal.
“We’ve learned that older adults want to remain physically and socially active and engaged in the community,” says Matt Winsryg, development planning director at Atria. “I think we were successful at Foster Square to achieve those goals.”
Located in California and Minnesota, these three horizontal mixed-use communities reveal some of the secrets about walkability, and provide a lesson in the risks of being a landlord.
The vertical, horizontal mixed-use
Lesson: give your residents walkability inside the building & out
CASE STUDY:
Atria at Foster Square
Location: Foster City, California
Part of: 15-acre Foster Square
Opened: 2016
Units: 155 in a mix of independent living, assisted living and memory care
Building owner: Atria Senior Living owns the building, but they sold the retail space to an outside retail landlord.
Care operator: Atria Senior Living
Architect: Perkins Eastman
Mixed-use elements: 21,000 square feet of ground floor retail
Occupancy: Still in lease-up, but ahead of projections.
Construction cost: This is a multi-million dollar project
Reason for mixed-use:
Foster City, about 21 miles south of San Francisco, owned 15 acres of undeveloped land which it wanted to use in part for senior living. A master developer, The New Home Company, worked with the city to develop six main areas: care-continuum senior housing, affordable senior rentals, for-sale age-restricted condos, an independent retail lot, a town square pare and an outdoor recreational area.
All of these areas are bound by walkways and gardens, which encourage walking.
Atria purchased one plot after winning a bid following TNHC’s request for proposal to multiple senior living providers. Re-zoning was required and was done prior to Atria’s involvement. Atria then developed the care-continuum senior living, a six-story building with 155 units of assisted living and memory care, about 21,000 square feet of ground-floor retail and on-site parking.
MidPen Housing of Foster City developed the affordable senior rental units — 66 in all — along with about 9,000 square feet of ground-floor retail, while Miami-based Lennar Homes developed the 200 for-sale condos. An upcoming 900-square foot lot of outside rental is in the works.
“We believe that this is a competitive advantage,” says Mark Alexander, senior vice president of redevelopment at the Louisville, Kentucky-based Atria, which has five mixed-use properties including at Foster Square. Along with the most popular benefits listed throughout this report, Alexander cites the proximity to and ease of travel as a crucial benefit, not just for residents and their visiting relatives, but also for staff.
“We are trying to create a better experience for residents, and a lot of that experience focuses on bringing in friends and family,” he says. “When you have a mixed-use urban setting, that is hard to replicate and is very hard to compete against.”
How Atria handled its retail:
Atria owns and manages the 155 units of senior living. As part of its agreement with the city, Atria built the retail space with the intention to sell to a retail landlord. In the 4th quarter of 2016, soon after the completion of the 21,000 square feet of retail, Atria sold the retail space to retail landlord Blake Griggs Properties in nearby Danville, California. Blake Griggs also purchased the retail space from MidPen, and independently operates that space.
Dining spaces in the Atria location include Bayview Restaurant, serving all three meals from 7 a.m. to 7 p.m., and the 707 lounge with a full bar and a range of small dishes. A bistro, which will be part of Atria’s operation, is coming in late 2018.
Atria’s design is intended to not just bring its residents into the community, but to bring the community into the building. The bistro will be more fully integrated with the building and hence offer community members access to an area other than the restaurants, while the multi-purpose room on the 2nd floor brings outsiders in even more.
“Folks with significant discretionary income are living with retail that is part of the building, many of whom will be regular customers for the retail environment,” Alexander says. “Being a senior-focused master plan, most of our residents don’t or won’t have cars. They’re there to use the amenities outside the door. They’re a big draw [for the retail].”
Urban mixed-use senior living is going to be a growing trend in our industry for many years to come.
Mark Alexander, Senior Vice President of Redevelopment, Atria Senior Living
The rewards — and risks — of senior living as landlord
Lesson: find great partners to run your retail and do what you do best
CASE STUDY:
The Promenade of Wayzata
Location: Wayzata, Minnesota
Opened: 2008
Senior living: Folkestone
Contractor: Adolfson & Peterson Construction
Site engineer: LHB
Units: 326 units of assisted living, memory care and skilled nursing
Building owner: Presbyterian Homes & Services owns the building under a spinoff company, serving as landlord to the retail.
Care operator: Presbyterian Homes & Services
Architect: Insite Architects
Mixed-use elements: 16 retail tenants — including Anthropologie and Sotheby’s — along with all-age condo
Occupancy: 100%
Construction cost: $332 million, of which $225 million was spent on the shops and senior living
Reason for mixed-use:
Billed as a high-end shopping, dining and beauty destination, the Promenade of Wayzata in Wayzata, Minnesota, was rocked by the Great Recession prior to finding its footing — a success story born of troubling times.
In 2007, Minnesota-based senior housing provider Presbyterian Homes & Services (PHS) bought 14.5 acres in Wayzata with a plan to develop five development blocks with retail, a hotel, all-age condos and senior housing. The organization pursued the project because of the location: senior housing was lacking in the region. The retail seemingly just made sense to include.
Fast forward more than a decade, and the Promenade has a bustling retail offering and senior living that is 100% occupied. Over its entire care-continuum portfolio — IL, AL, memory care, skilled nursing and short-term rehab — PHS occupancy rates stay between 94 and 95%.
“I think [the retail is] an added value,” says John Mehrkens, vice president of development with Senior Housing Partners, the development and expansion arm of PHS. “In that particular project there was such a pent-up demand for senior housing because the barriers to entry in that marketplace were so high. … [Retail] was part of our success. It certainly wasn’t the primary reason for our success, however.”
The risks of senior living as retail landlord:
The Great Recession hit The Promenade of Wayzata particularly hard. PHS’s original plan was to open the all-age condos and the retail first, using sub-developers for those plus the hotel while they, PHS, would own the senior housing. They signed their development contract with the city in 2008.
Then the recession hit, and Mehrkens found that the senior housing was most viable during the recession, which knocked out the interest from retail developers. With the demand for senior housing and no demand for the retail space, PHS became both senior housing developer and retail developer.
“[Mixed-use] is a great thing so long as that retail space is occupied,” he says. “If it’s vacant, it’s a liability to the housing.”
PHS responded by hiring Mid-America Real Estate Group, a leasing retailer that became the development’s retail manager and their broker for finding retail tenants. Today, the retail is 60% full, with PHS still acting as the landlord.
“The vertical mixed-use works great and provides supplemental income, but you do take on the risk of vacancy as any landlord of that space would,” Mehrkens says. “In the long run, our expectation is that [the retail] is going to have tremendous value. In the short run, because retail is a fast changing element, it’s been a little bit of a drag for us — a financial drag.”
PHS has a handful of other mixed-use projects. Mehrkens sees the risk of retail as an argument for more horizontal mixed-use and less vertical, and for ensuring retail partnerships.
“Our core mission is to provide for senior housing, and when there are projects that lend themselves to retail, we are not going to shy away from those,” Mehrkens says. “But I think we are more likely to let that risk be taken by somebody whose core business is retail.”
On the future of mixed-use, Mehrkens added: “I think it will probably continue to be a significant element of what we do.”
Our core mission is to provide for senior housing, and when there are projects that lend themselves to retail, we are not going to shy away from those.
John Mehrkens, Vice President of Development, Senior Housing Partners
Active adult meets a shopping center
Lesson: municipalities — and retail neighbors — want senior housing
CASE STUDY:
Azulon at Mesa Verde
Location: Costa Mesa, California
Opened: 2014
Units: 215 active adult
Building owner: M.V. Partners owns Azulon, the senior living community, and The Shops at Mesa Verde, the shopping center.
Architect: KTGY Architecture + Planning
Mixed-use elements: A range of offerings, including dining, groceries, salons, pharmacy and financial.
Occupancy: 99%, with 93% retention
Construction cost: $30 million (includes only hard construction costs)
Reason for mixed-use:
Just as Atria at Foster Square can be seen as a bridge between vertical and horizontal mixed-use, Azulon at Mesa Verde is a bridge between horizontal and master plan. That’s because the 315,000-square foot Azulon community, which offers 55+ housing, is adjacent to a neighborhood shopping center — all owned by one organization, M.V. Partners of Costa Mesa, California.
“When you’re talking about something like The Villages [in Florida] being a mixed-use development, Azulon actually fits into that mold because the entire development is owned by a single entity,” says Manny Gonzalez, whose KTGY Architecture + Planning designed Azulon.
The shopping center, which was built in the 1960s and remodeled in 1998, went through a stretch of vacancy prior to M.V. Partners developing Azulon in 2008. The company wanted to create a mixed-use community, and the city specifically wanted 55+ housing, which was in short supply.
“There was a need for senior housing, multifamily in general, but the political reality of getting the project approved through the city of Costa Mesa really required it to be 55+ as opposed to just conventional apartments,” says Azulon development manager Jeffrey Reese of M.V. Partners, which owns Azulon and The Shops at Mesa Verde.
Reese cites the value of seniors remaining in an area if they are happy combined with their low impact lifestyles on traffic and schools as the main reasons behind going mixed-use for this site.
“55+ housing was feasible without a lot of opposition,” he says. ”It’s a really good demographic to bring into a largely residential community.”
Relationship between housing and retail operators:
The Shops at Mesa Verde includes a Vons grocery store, Starbucks, CVS, Roebucks Juice, a nail salon, a hair salon, a yoga studio, a chiropractor and two banks—“kind of your daily use needs,” Reese says, adding: “Having any apartment complex next to a neighborhood center just makes good sense.”
M.V. Partners controls the tenant mix and serves as landlord to the retailers. They use CBRE to assist with the retail leasing effort. That said, because Azulon and the shopping center maintain separate operating statements and separate accounting, none of the retail revenue is allocated to Azulon’s operating budget. This ensures that each component carries its own weight. The primary benefit of co-locating the shopping center and the active adult housing is in the value to the Azulon residents.
“Having the retail center next to Azulon is more of an added benefit to Azulon than vice-versa,” he says. “I think we are able to command a little higher rent on Azulon [because of the retail]. How much more, I couldn’t really tell you.”
Strategies for Master Planned Mixed-Use
Forget measuring in square feet. Mixed-use master planned communities measure in square miles.
Set in 1,400 acres of forests and meadow outside Atlanta, Serenbe offers its 600-plus residents — about 30% of whom are 55 or older — tranquility and nature with a small town feel. Set on 1.5 square miles on a former U.S. Naval base outside Chicago, The Glen has a range of housing options, including three senior housing options.
Both opened in the early 2000s, the two communities offer very different lifestyles. Serenbe’s founders describe it as biophilic, agrihood and art-focused, while The Glen looks exactly how you might imagine a miniature, modern suburb popping up in the middle of a field.
But they share some intrinsic values and overarching structure, as they are both intergenerational, multi-purpose, fully functioning towns built in a master plan aimed at giving residents everything they need to live.
“To me, this is the future of age-qualified housing,” says Manny Gonzalez. “I don’t think it’s the entire future — there are people who will still want to live in the Villages. … But I think there are all sorts of opportunities, and I do think that blended communities have a lot of advantages from a social standpoint, from an inter-generational standpoint. It’s a nice way of doing things.”
A city within a city needs senior living
Lesson: connect your brand with a master plan
CASE STUDY: The Glen
Location: Glenview, Illinois — 13 miles north of Chicago
Opened: Process began in 1997
Acerage: 1,121 total acres — 88, business park; 84 retail/commercial; 342 residential, including 38 for senior housing (source: Urban Land Institute)
Housing: 1,969 total housing units, including 673 senior units (source: Urban Land Institute)
Senior living options: Vi at The Glen (CCRC), Chestnut Square at The Glen (Independent Living), Emerald Place (memory care)
Mixed-use elements: Shopping, dining, entertainment, housing, apartments and green space
Reason for mixed-use:
Following the closure of the Glenview Naval Air Station in 1993 in Glenview, Illinois, the city of Glenview conducted a development plan for the 1,121-acreage piece of land. The Glen was born: a veritable city unto itself with shopping, dining and entertainment, all grouped in the 470,000-square foot Glen Town Center.
That space includes 181 rental apartments above store fronts; all told, the overall master plan offers a variety of living options, including for-sale and rental houses and apartments.
It also has senior living. Illinois’s Anthem Memory Care runs Emerald Place. Bethany Methodist Communities of Glenview, Illinois, runs Chestnut Square at The Glen. And Chicago-based CCRC provider Vi operates Vi at The Glen.
By 2001, 95% of the total amount of land at The Glen had either been sold or leased. In 2002, Vi at The Glen opened. Situated on 26 acres, the VI CCRC is the luxury senior living option at The Glen, a name loosely applied to all development on the original naval base, not just that which is operated by the Glen Town Center.
“Our residents love the lifestyle that is offered here,” says Steve Samson, Vi at The Glen’s community relations manager. “We have a great relationship with this community, and in fact, we are one of the proud sponsors of the annual 4th of July parade in Glenview each July.”
That interaction with the youth residents of broader Glen community creates an intergenerational element for the senior residents of Vi at The Glen. Consistency of homelife and community is very important to Vi at The Glen residents, with around 90% of them moving from within a 10-mile radius.
The shopping and entertainment offered by The Glen is a draw for residents, as are the nearby gardens, children’s museum and public library. Its marketing materials makes clear the advantages of living within the master planned community. Age-qualified for 62 and better, Vi at The Glen has 296 individual apartments or freestanding villas, 23 assisted living units, 13 memory support units and 47 nursing care units.
A city within a city needs senior living
Lesson: when seniors are fully integrated with all ages — and living in walkable nature — their lives are richer
CASE STUDY:
Serenbe
Location: Chattahoochee Hills, Georgia — 30 miles southwest of Atlanta
Opened: 2004
Senior living options: Full care-continuum senior living available
Mixed-use elements: 40,000 acres have been re-zoned around Serenbe, with shopping, dining, entertainment, farming, green space and a variety of living options
Construction cost: $2 billion
Reason for mixed-use:
With four hamlets comprising 340 homes and more than 600 residents on 1,400 acres, the sustainable, nature-centric community of Serenbe outside Atlanta is massive.
Included on the land is a 25-acre farm, four restaurants, 12 retailers and a Montessori school, as well as housing options of all kinds for all ages. The result is an intergenerational, farming- and nature-oriented community that is best thought of as its own town.
“This is a vital town that is engaged in the art of living,” says Steve Nygren, who founded the community with his wife Marie. “This isn’t a cruise ship with planned activities.”
Like all mixed-use developments, walkability plays a huge role for Serenbe residents. The combination of that freedom of movement with the connection to nature is one of Serenbe’s biggest benefits to seniors, Nygren says.
“It is a walking, multi-generational, mixed-use community, and because [the seniors] know people of every age, it gives them a brighter perspective than only being around elders,” he says. “By having a walking community, they naturally get more exercise — just walking to get the mail, walking to the gym, yoga classes, walking to dinner, walking to friends’ houses. It’s a culture where everything is close enough that you would look silly getting in a car.”
True intergenerational living for seniors:
“The problem with the way we built America,” Nygren says, “is that there are too many boxes and rules and regulations. And we don’t leave enough room for creative thought.”
When Serenbe launched, the Nygrens brought a mindset to senior living that is shared by most master plan communities that cater to multiple age groups. They planned to cordon off a specific area for their 55+ demographic — 30% of Serenbe’s residency. The thinking is that even seniors who want an intergenerational experience crave their own living space so as not to be surrounded by children and working parents.
“We found that that’s not the case — they really don’t want to have a designated area,” Nygren says. Their initial plan for their community’s senior living was 16 cottages all designed around a medicinal garden and promoted as 55+.
Instead of flocking there, Serenbe’s 55+ residents purchased cottages throughout the acreage.
“We thought this would be what they wanted and it wasn’t,” Nygren says. “We have taken that restriction off. … All of a sudden you have these substitute grandparents relationships that are happening all over the community.”
That connection creates not just new relationships in life, but experiences in death unfamiliar to many Americans.
“We had a death here, someone who has lived here 10 years, and they died in their home and the community came around to support the caregivers and his wife,” Nygren says. “They didn’t have to leave their home and their friends and neighbors were around them.”
Considering Serenbe’s size, it might be surprising to hear that the community is only 25% built out. One-hundred percent buildout will mean 3,000-3,500 residents. As the community continues to grow, the Nygrens’ creative thought will continue to open new doors. They are even looking for forward thinking senior living providers to step in and bring management expertise to enhance the senior experience.
“We’re certainly open for it, but we want progressive models,” he says. “We don’t have a formula. It’s what works and what is going to get to the end result of a place where people can age with dignity and integrate in the community. … We’re very progressive. We need an operator that understands some of those things.”
The Future of Mixed-Use Senior Living
The creativity in mixed-use senior living is just beginning to bloom. Along with the increasingly common incorporation of on-site retail options, developers are also pairing senior living with a range of uses, property types and business models in both vertical and horizontal templates.
Some examples of this recent innovation include:
Senior living and train travel. In January 2018, a $10.9 million affordable senior apartment building broke ground next to the Swansea MetroLink station in Swansea, Illinois, outside of St. Louis, Missouri.
Senior living and medicine. Like Belmont Village and American House, other developers are seeing the value of co-locating senior housing and medical services. In February 2018, Orlando-based Ponte Health Properties announced the $1 billion Vertical Medical City in Orlando: three separate high-rise towers, with 40% of its space for residents, 40% for physician and clinician office space and 20% for emergency and surgical facilities.
In Fort Myers, Florida, Hope Healthcare is developing Hope Preserve, a 46-acre development mixing 148 beds of care-continuum senior living, an adult day care and therapy center, child day care and 160,000 square feet of medical space and office space, all located less than a mile from a hospital.
Senior living and insurance. In China, insurers are building retirement communities for wealthy seniors in which prospective residents must purchase a life insurance policy from the insurer — along with standard monthly living fees — in order to live there. These communities include hospitals, along with other amenities.
The idea of building a childcare or preschool on site with the senior housing is one that came up several times in this report, and is at the heart of the “Next Steps” R&D plan from KTGY Architecture + Planning. Along with ground floor retail and multiple restaurants, KTGY’s Next Steps urban high-rise development includes a day care, as well as a pet spa for animal care. These additions work to align the practical, social and emotional benefits for seniors of interaction with children and animals.
As KTGY’s Manny Gonzalez sees it, the future of mixed-use vertical means taking the well-rounded lifestyle of a master plan or horizontal mixed-use community and infusing that lifestyle into a single structure in an urban setting.
“Even in urban areas, you still need child care centers and some sort of shopping and dining,” Gonzalez says. “The idea with the mixed-use urban Life Plan Community is to open up new development opportunities in markets that might have been overlooked in the past.”
In doing so, Gonzalez says, mixed-use in all of its forms can bring otherwise reluctant residents into the fold.
“I think you’re able to attract people who would never want to move into a large age-qualified community, because there is a stigma associated with that,” Gonzalez says. “This may get people to sell or downsize or move because they are moving into a community that gives them something different that they haven’t had before.”
Even in urban areas, you still need child care centers and some sort of shopping and dining. The idea with the mixed-use urban Life Plan Community is to open up new development opportunities in markets that might have been overlooked in the past.
Manny Gonzalez, Principal, KTGY Architecture + Planning
