New Projects, Data Show How Covid is Reshaping Senior Living Adaptive Reuse Market

Senior living owners, developers, and operators have found success in recent years repurposing a variety of seemingly obsolete buildings into senior housing, from schools to shopping malls to traditional apartments.

Now, adaptive reuse is gaining even more momentum as a senior living development route. Developers are seeking out adaptive reuse opportunities as construction materials and labor costs continue to climb, and global supply chains remain disrupted by Covid-19. The right building can be cheaper to renovate into senior housing, compared to developing a new community, and can be brought to market sooner.

Furthermore, office and hotel performance continues to lag due to pandemic-related pressures, which may result in future opportunities to build senior housing that meets growing demand.


Three building types that have gained favor as adaptive reuse projects are office buildings, hotels, and hospitals. Each shares many design and plant commonalities with senior housing, from floorplates and passageways to HVAC, kitchen and other back-of-house facilities.

A number of recently announced or completed developments stand as examples of the potential for adaptive reuse to reshape the future of senior housing.

A record 2021

Carl Elefante, onetime president of the American Institute of Architects, once said, “The greenest building is the one that already exists.”


Developers and owners across the commercial real estate industry have taken this to heart. Adaptive reuse of older buildings gained significant momentum over the past decade, and multifamily has emerged as a popular product for owners and developers looking for older buildings to convert.

The trend reached a peak in 2021. Nearly 20,100 new apartments will be built this year, in 151 repurposed buildings, according to data from real estate tech firm Yardi. And the future is bright for adaptive reuse — over 52,000 new units in various stages of development will be delivered in 2022 and beyond.

Rising construction materials costs have played a contributing factor in the uptick in adaptive reuse projects. Covid-19 has exaggerated this issue over the past 18 months. Supply chain delays and further raw materials increases continue to pressure construction pro formas and margins, according to a new construction outlook report released by global real estate services firm JLL (NYSE: JLL).

The report notes that steel costs skyrocketed 123% in 2020, lumber costs spiked 111% last year, and aluminum costs increased 35%.

Construction materials are so in demand that developers and contractors are warned that price quotes from suppliers are subject to change in as little as 10 days, Greg Blythe, director of mechanical, electrical and plumbing (MEP) pre-construction services at The Weitz Company, told Senior Housing News last month.

Repurposing older buildings can help developers and general contractors keep building pro formas in check and, depending on the age and condition of a building’s shell and plant operations, make adaptive reuse an attractive alternative, from a replacement cost perspective.

Office buildings lead the way

Of the total adaptive reuse multifamily units delivered in 2021, 41% are in former office buildings.

Developers are particularly attracted to office reconversions in prime urban markets with historically strong demand in recent years, and where former office buildings are plentiful. Over the past two years, 13,253 new apartments were created from former office buildings, according to a breakdown of Yardi data provided to SHN.

And with more companies adapting a hybrid work model for the foreseeable future, the probability exists for vacant or shadow office space to increase, making smaller office buildings ideal candidates for adaptive reuse.

Senior living developers have turned to offices as adaptive reuse opportunities in recent years. Anthology of the Plaza is an 83-unit assisted living and memory care community housed in a former five-story office building in Kansas City, Missouri, and was the Best Repositioning winner in the 2019 SHN Architecture & Design Awards.

A more recent example is LIVIA at East Hanover, a long-term care facility consisting of 86 skilled nursing beds and 37 assisted living residences from Bloomfield, New Jersey-based full-service health care and commercial real estate development firm CHA Partners.

Image courtesy of CHA Partners
Outdoor seating at LIVIA at East Hanover, a skilled nursing and assisted living facility in East Hanover, New Jersey from CHA Partners.

This development, which also marks the launch of the LIVIA brand, was formerly a 100,000 square-foot office building, Managing Partner Bill Colgan told SHN.

CHA acquired the building, formerly owned by global health care company Novartis, within two months of the Swiss conglomerate vacating the building in 2018. CHA was attracted to the building’s floorplates and layouts, which could easily accommodate the company’s neighborhood concept where residents are grouped in very small numbers, creating a home-like feel.

“It is very difficult to find a commercial office building with an ideal floor-plate. Additionally, medical facility requirements dictate a greater floor-to-underside of slab height than was built in the 70s and 80s,” he said.

The building’s centralized all-glass atrium and lobby serves as a focal point for visitors, and provides residents the benefits of being outdoors, within a climate-controlled environment. And, as a building owned by a well-capitalized global pharmaceutical company, its common areas, offices and physical plant were well-maintained.

Colgan estimates the bulk of CHA’s savings repurposing LIVIA at East Hanover derived from the cost of the core and shell, which is generally around $50 per square foot.

“The intangible savings is time to market,” he said.

Hotel recovery lags

Hotels have also proven popular for adaptive reuse, accounting for 30% – 3,908 units – of all proposed conversions since 2020, according to Yardi’s data.

That number may grow, as the hospitality industry continues to struggle during the pandemic.

Research from business management consultancy McKinsey suggests that a hotel recovery to pre-pandemic levels will not occur until 2023, if not later. Real estate investment trusts (REITs) specializing in hotels and hospitality are expected to underperform until business and vacation travel rebounds.

This raises concerns about distressed hotels hitting the market, which can present unique redevelopment opportunities including senior housing. And there are signs of distress brewing.

Hotels account for the largest share of buildings proposed adaptive reuse opportunities during the pandemic. Of 81 buildings proposed for multifamily adaptive reuse during the pandemic, hotels account for 32.1% – 26 buildings totaling 4,073 units.

As with offices, hotels — particularly newer ones — are attractive options for repurposing because of speed to market. Modern hallway widths can accommodate seniors in various stages of mobility decline. Common areas can be repurposed fairly quickly. Kitchens, HVAC and other back-of-house systems require minimal maintenance and retrofitting, if at all. Technology systems can be adapted to install communications and telehealth systems. For market rate developers and operators, hotel rooms can be combined to create larger apartments.

Many senior living firms are pursuing hotel reconversions. Brentwood, Tennessee-based Vitality Living is turning a former hotel in Metairie, Louisiana into an active adult community. Lloyd Jones Capital Chairman and CEO Chris Finlay told SHN last March that his firm explored hotel conversion opportunities pre-pandemic. He believes that existing layouts, along with building code requirements, make full-service hotels perfect for full-service independent living, while extended-stay and economy hotels could make quick conversions into age-restricted apartments.

Fairstead, a New York City-based investor and developer, is planning a $60 million adaptive reuse of the Park 79 hotel, a landmark hotel on Manhattan’s Upper West Side, into 77 affordable senior apartments for independent seniors.

affordable senior housing, adaptive reuse Courtesy of Fairstead
Affordable housing developer Fairstead is readapting the Park 79 Hotel on Manhattan’s Upper West Side into affordable senior housing.

Fairstead Founding Partner Will Blodgett told SHN in November 2020 that the project was a can’t miss opportunity, given the hotel’s proximity to Central Park. This makes the neighborhood itself one of the new community’s best amenities.

One of the highest profile hotel redevelopments involves the Fairfax at Embassy Row in Washington, D.C.’s Dupont Circle neighborhood.

Last month, Maplewood Senior Living and Omega Healthcare Investors (NYSE: OHI) announced they acquired the eight-story, 259-unit hotel and will redevelop it as the second location for the joint venture’s luxury Inspīr senior housing brand. Plans call for 174 private apartments for assisted living and memory care residents along with upscale amenities and services.

The first Inspīr community, Inspīr Carnegie Hill, was a ground-up development that cost $315 million to develop, across five parcels of land in Manhattan.

The Maplewood-Omega JV acquired The Fairfax at Embassy Row for $58.1 million, and the D.C. Inspīr can be brought to market faster and cheaper, compared to new development costs, Maplewood CEO Gregory Smith told Washington Business Journal.

The JV was attracted to the hotel because of its location, identity and historical significance, Maplewood Chief Investment Officer Tom Gaston added.

After doing due diligence on the building, Maplewood determined that a gut rehab of the hotel’s interior is necessary, to reconstruct it into a new state of the art building with Inspīr amenities and standards. The operator is also exploring any previous improvements to be incorporated into the design.

No foundation work is expected, which should expedite the development timetable in bringing the project to market.

““By utilizing an existing structure, we will be able to condense the overall development timeframe,” Gaston said.

Hospitals to senior apartments

Hospitals lag offices and hotels as a redevelopment opportunity, but trends in health care real estate and how health care is delivered, as well as design features, position the product type as a dark horse candidate for adaptive reuse.

Pre-Covid, health care real estate was already evolving.

Provider consolidation and decentralized models of patient care resulted in primary care providers, outpatient clinics, and specialists setting up locations in neighborhoods where their patient bases live, and away from large medical campuses anchored by hospitals.

Telehealth services exploded during the pandemic. A September 2020 survey from SHN and global health technology firm Philips revealed 80% of respondents reported an increase in tech spending to address the pandemic.

The rise of value-based care and home health care services prioritizes wellness, early treatment, and positive health outcomes over acute care. And the pandemic exacerbated an ongoing trend of rural hospital closures. Over 138 hospitals have closed since 2010 – 19 in 2020, according to data from the Cecil G. Sheps Center for Health Services Research at the University of North Carolina.

Older hospital building designs are ideally suited for senior apartment renovations, due to their room sizes, narrow corridors and plenty of windows which provide ample natural air and sunlight, Evergreen Real Estate Group Director of Development David Block told SHN.

The Chicago-based developer and operator is no stranger to repurposing hospitals into senior housing. In 2017, the firm completed a $24 million renovation of the landmark St. Charles Hospital in Aurora, Illinois into Aurora St. Charles Senior Living — 60 studio, one-bedroom and two-bedroom apartments for seniors.

Andrew Bruah Photographer

In July, Evergreen welcomed its first move-ins at Ravenswood Senior Living, a 193-unit affordable senior apartment community on Chicago’s North Side. The $81 million project converted the former Ravenswood Hospital, built in 1974 and vacant since 2002, into independent living and supportive living units. The project took five years and a change in Illinois state regulation allowing for assisted living in mixed-use developments.

The true value in repositioning older hospitals is found in the condition of the shell, Block said. Plant infrastructure such as water and oxygen systems, and nurse call technology, are obsolete and cannot be adapted for residential use.

Hospitals built before the 1940s are best suited for residential use, because they tend to be rectangular in shape, with corridors situated in the middle of the building. Hospitals built after World War II, such as Ravenswood, are square in design, resulting in wasted space in the middle while repurposing.

But with rising construction and land costs, Ravenswood Senior Living was still a viable adaptive reuse project due to its scale and urban infill location.

“It would have cost millions of dollars to tear down the building,” Block said.