Luxury retirement communities—many with rooftop pools, celebrity chefs and spa-style wellness centers—are planned for major U.S. cities
Baby boomers aren’t going to tolerate being put out to pasture.
That’s the thinking behind an expected surge in development of luxury senior-living communities in dense urban settings.
Many developers are betting that over the coming decades, more seniors will shun traditional suburban retirement communities and demand to live where there are lots of dining, entertainment and shopping choices nearby. As a result, a plethora of projects, many with rooftop pools, celebrity chefs and spa-style wellness centers, are planned for major U.S. cities.
“Everybody’s trying to crack the code for what the baby boomers want,” says Beth Burnham Mace, chief economist at the National Investment Center for Seniors Housing & Care. Fewer than 20 ultra high-end senior living communities exist in downtown urban areas across the country now, she estimates, and predicts that number could triple, or more, in the next several years if projects in the pipeline pan out.
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B ecause it’s much more expensive to develop senior-living housing in cities than in suburbs, many of these new projects—from independent-living and assisted-living properties to skilled nursing care and memory-care units—are expected to aim at the high end. Some developers are looking at converting unused office buildings and hotels, options increased by pandemic vacancies. They are also betting more seniors will be able to afford luxury housing: Research shows baby boomers, born 1946 through 1964, will drive a rapid expansion in the share of high-income seniors in coming years.
“There’s an enduring lifestyle commitment among our customer base to remaining in the cities,” says Bryan Cho, Executive Vice President of Related Cos., which recently opened a luxury senior community with Atria Senior Living under the Coterie brand in San Francisco. “Every generation has different tastes. There’s a desire for people to get back together in a post-pandemic world. They want to be connected to culture and family.”
At the San Francisco property, with monthly rents of $8,000 to more than $25,000, services include meals, housekeeping, concierge services and cultural programming. Related will open a community in New York City’s Hudson Yards this fall, and recently announced similar projects in the downtowns of Santa Clara and Cupertino in California. It expects to have two to three urban projects a year in coming years in large urban centers including New York, Boston, Washington, Chicago and Los Angeles, Mr. Cho says.
The pandemic had tragic consequences in many senior-living communities because of the vulnerable population they serve, and caused many to leave or avoid these facilities. But, helped by the advent of vaccines, sentiment has shifted and the sector is starting to recover, according to a report by commercial real-estate analytics firm Green Street.
Many developers are counting on what’s dubbed the silver tsunami to begin boosting demand for senior housing by the mid-2020s. The 80-plus population in the United States will roughly triple in 2023 from its 2018 level to around 600,000, according to the U.S. Census Bureau’s International Database. The data show that by 2024 there will be a greater number of older adults than children under age 18, increasing the need for support services.
Historically, most senior housing was built in suburban locations, and over the past several years, there’s been a recognition that many urban markets are underserved for senior living, says David S. Schless, president of the American Seniors Housing Association in Washington. He estimates about a quarter of new development will be targeted to city locations over the next five years.
The higher costs of urban locations have been a barrier to senior-living development. But with the percentage of baby boomers living in cities rising, according to Census Bureau data, developers expect more demand from those wanting to stay. As development costs are generally 30%-40% higher in cities than in suburbs, most of these urban senior-living communities are likely to be luxury residences that appeal to the upper-end private-pay market and wealthier people already living in urban areas, says Byron Carlock, head of PricewaterhouseCoopers’s U.S. real-estate practice. The great majority of private senior-living communities don’t accept Medicare.
“The light has gone on,” says Al Rabil, CEO of Kayne Anderson Capital Advisors, which has investments in various brands of senior-living communities around the country, including in Boston and Los Angeles, and projects in the pipeline for St. Louis, Mo., and Denver, Colo. “Just because you’re 82, you don’t have to move out of the city. People want to stay where they are. It’s where they go to live, not to die.”
Read the full article on Wall Street Journal.
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