Boom in Wellness Real Estate Strengthens Case for Senior Living Innovations

Last week, two news items underscored how much the future of senior living will be tied to the concept of wellness:

  • Data from the Global Wellness Institute (GWI) showed that the wellness real estate market nearly doubled from $148 billion in 2017 to $275 billion in 2020
  • Mather introduced a new wellness model for senior living, with hopes that the framework will catch on widely in the industry

The Covid-19 pandemic “has driven the idea of ‘building for human health’ into the mainstream consumer consciousness,” and accelerated the adoption of wellness-related principles in real estate and construction, GWI Senior Research Fellow Ophelia Yeung said in a press release.

Mather is one organization contributing to the global explosion of wellness-related real estate projects, with its highrise life plan community under development near Washington, D.C. As the nonprofit considered how to design and program this community, its leaders recognized the need for a new approach to wellness, to update the prevalent industry model that dates back to the 1970s.

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Last week’s news suggests how senior living providers will pursue wellness goals as the baby boomer demand wave crests in the coming years, and some work that still needs to be done to integrate wellness in senior housing and other types of real estate, including:

  • Senior living is contributing to trends in wellness real estate, but must keep up with innovations
  • Personalization and partnerships are emerging as keys to senior living wellness models
  • The business case for wellness models is becoming stronger, but more tools are needed to quantify wellness benefits in senior living

The boom in wellness real estate

In 2018, GWI identified 740 wellness residential projects around the globe. Today, such projects are too numerous to count, but the organization estimates more than 2,300 are built, partially built or in development. GWI defines wellness real estate as properties that “incorporate intentional wellness elements in their design, materials and building, as well as their amenities, services and/or programming.”

“Wellness living concepts are being developed in all types of residential projects: master-planned communities; multifamily projects (apartments, condominiums); urban districts and mixed-use projects; resort/spa/hospitality-based wellness real estate; affordable/subsidized housing; and other wellness concepts based on eco-communities, co-living, senior living, and more­—taking an increasingly dizzying number of ‘wellness angles,’ GWI stated last week in a press release announcing its latest research findings.

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The United States is the top market for wellness real estate globally, and wellness real estate growth outpaced overall construction growth in every region worldwide during the pandemic.

Given the scale of wellness-oriented real estate development, it is no surprise that various approaches and innovations are being pursued across different geographies and sectors.

I think the U.S. senior living sector can take pride in the fact that many projects embody the key wellness trends identified by GWI, including:

  • Optimizing wellness through better ventilation and air filtration; touchless doors and elevators; and UV light sanitation
  • Improving access to outdoor spaces and supporting nature-based activities
  • Lighting and temperature features to support better sleep
  • Providing exercise amenities and spaces that encourage physical activity and socialization
  • Implementing sensors and other smart technologies that can detect falls and monitor health indicators
  • Pursuing wellness certifications such as WELL and Fitwel

To stay on the leading edge of wellness real estate, U.S. senior living providers will have to keep up with an accelerating proliferation of innovations around the world, and consider potential applications here.

For instance, while international senior living developments have borrowed heavily from U.S. models, they also are taking the integration of nature and the built environment to new levels.

Consider how Sun City Tachikawa in Tokyo “flows into” a nearby national park; or the creation of “vital life courtyards” of Taikang Community Yue Garden in China; or the “green spine” of Rawhiti Estate in New Zealand. Just last week, Australia-based Lendlease announced the opening of a large-scale senior residence in China on the banks of Dianshan Lake, which received a “Well” rating from the International Well Building Institute.

Building the business case

There have been various drivers behind the rise of senior living wellness models, including shifts in U.S. health care policy to reward providers for keeping costs down through more coordinated and preventive services.

By maximizing resident wellness rather than primarily responding to their increasing health care needs, senior living providers are positioned to keep older adults healthier for longer periods of time. This improves their quality of life while also increasing length of stay — and should also result in fewer costly interventions like hospitalizations.

Genetics accounts for 10% to 15% of health outcomes, with external and environmental factors accounting for the rest, according to research cited by GWI in 2018. However, the industry is hampered by a lack of metrics to “measure and communicate” the health benefits that wellness real estate can engender.

GWI proposed a dashboard of potential metrics that developers and operators can create via surveys:

  • Health and wellbeing outcomes
  • Wellness behaviors
  • Sense of community

I think that in the last three years, the situation has improved through new research and data gathering efforts, including Mather Institute’s AgeWell study. However, senior living organizations need to consider what data to capture, and how, in order to demonstrate the value that they can bring to health systems and payers through increasingly sophisticated approaches to wellness.

New consumer expectations also are driving the rise of wellness in senior living. In 2018, GWI calculated there are about 1.3 million potential buyers interested in U.S. wellness communities each year, and interest is not correlated with income, age, education or gender.

Mather CEO Mary Leary told me that she already is witnessing the huge demand for wellness offerings from baby boomers who are considering a move to Mather’s new life plan community, The Mather, in Tysons, Virginia.

And consumers are willing to pay a premium for wellness. A GWI survey of academic literature found the following price premiums for homes:

  • 3% to 12% for nearby open space, greenbelts and conservation areas
  • 4% to 20% for nearby parks and multi-use trails
  • 5% to 15% for recreational programming and amenities
  • 5% to 20% premium for being located in mixed-use, higher-density, transit-oriented and traditional neighborhood design areas

But while there is a clear business case for wellness-oriented real estate, wellness offerings also come at an operational cost, and developers and operators need to be smart and flexible in funding mechanisms.

In senior living, we are beginning to see more creativity in how wellness models are financially supported, including through membership models; a la carte pricing of amenities and services; and upfront fees similar to life plan community entrance fees but at a lower price point.

But particularly for middle-market or affordable properties, I think that further innovation is needed to support the expansion of wellness in senior living. One approach that is garnering interest involves smaller-footprint homes clustered together around shared amenities, such as the Kallimos Communities concept put forward by Bill Thomas and colleagues.

Partnership and personalization

Another emerging trend identified by GWI is described as “From ME to WE.”

“The pandemic has brought a new level of understanding that our individual health and well-being are intrinsically linked with our community and the broader environment,” the report states. “For example, a recent Harvard University study found that higher rates of air pollution are correlated with higher Covid-19 deaths in the United States.”

I think this trend is reflected in the new wellness model proposed by Mather. In the typical “Six Dimensions of Wellness” model — widespread in senior living — the focus is on each individual’s emotional, occupational, physical, social, intellectual and spiritual wellness.

This approach gives short-shrift to how an individual’s community and society also affect wellness, researchers and executives with Mather determined.

In their model, senior living providers are called to look beyond their walls or campuses, to become more integrated into the larger community and drive toward wellness imperatives on that level.

Partnerships between senior living providers and external organizations therefore become central to future wellness models. Mather, for instance, works closely with Northwestern University — which is near Mather’s headquarters in Evanston, Illinois — and has forged innovative relationships with organizations such as the Chautauqua Institution.

But just as senior living providers need to expand their reach and influence, they need to be taking a new approach to individual wellness, according to Mather. The organization proposes a more personalized approach to wellness, tailored to each individual’s personality and goals, while rooted in each person’s need for autonomy, sense of achievement, and affiliation with others.

Mather is not the only senior living provider that is basing its wellness model on partnerships and personalization.

Discovery Senior Living created an “experiential living” model by leveraging business intelligence data to offer more a la carte services, enabling residents to create individualized lifestyle packages. Just today, Discovery announced the rollout of its FlexChoice program.

“Created to help empower a more customized lifestyle experience for each individual resident, FlexChoice allows seniors to choose from dozens of available dining and lifestyle service options and pay only for those they opt to enjoy each month,” a Discovery press release stated.

And Watermark Retirement is pursuing “precision wellness” for each resident, with the help of Canyon Ranch veteran Aras Erekul. Over the years, Watermark has collaborated with wellness pioneer Canyon Ranch, which has a location in Watermark’s home base of Tucson. Going forward, Watermark intends to aggressively leverage partnerships with academic, cultural, medical and various other organizations to support its ambitious wellness plans.

“There are literally thousands of affiliations that we could have been cultivating,” Watermark Chairman David Freshwater said during last year’s virtual Senior Housing News BUILD event. “If you have more minds approaching a topic, you’re going to do better at it than if you just stay myopic.”

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