A New And Emerging Housing Segment

The Real Estate Espresso Podcast

A New And Emerging Housing Segment

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A New And Emerging Housing Segment

Today, we’re exploring the world of real estate investing, focusing on a new class of apartment living. This exciting segment has begun to establish a foothold in several markets and is something we’re considering for our new construction projects.

The Evolution of Senior Care Pedigree

The continuum of care for aging adults has seen significant changes over the years, with new product types emerging and being endorsed by the market. Over the past few decades, we’ve witnessed an evolution from the old-fashioned concept of nursing homes into a diversify portfolio of care types catering to different levels of needs in the aging population.

This includes specialized forms like memory care, assisted living. The type of care an aging adult needs, is determined by their individual capabilities. Essential tasks such as getting in and out of bed unassisted, feeding, clothing oneself, and even taking medication all form the foundation of care consideration.

The Active Adult Rentals Revolution

There is an emerging category of housing, what we internally name as ‘concierge apartments’ or the industry often refers to as ‘active lifestyle apartments’. This new housing model caters to older individuals who desire to live in a multifamily setting, but still maintain a relative level of independence and activity, compared to the traditional senior housing population.

As a response to the preferences of the leading edge of the baby boomer generation, active adult rentals provide a unique blend of convenience, amenities of a traditional multifamily living, but are surrounded with residents from the same age cohort.

These contemporary apartments are often promoted as ‘active adult apartment homes’ or 55 plus communities. They generally serve the younger spectrum of the older adult population looking for convenience, lifestyle and distinctive amenities, while being co-located with peers.

The Market Realities

Contrastingly to conventional multifamily properties, which cater to a wider audience, these properties require uniquely tailored marketing strategies and pricing models. Despite slow leasing-times and higher rents, the lifestyle benefits offered by these active adult communities often result in much longer tenures, ranging from six to nine years, with a remarkable 80% retention in stabilized properties.

Looking at data from a recent industry study, the average tenant stay across various senior care options paints an interesting picture: 2.9 years in memory care, 4.3 years in independent living and 9.2 years for some of the entrance fee continuing care of retirement communities.

Conclusion

Reflecting on these developments, it’s clear that the active adult rental market holds promising opportunities. We anticipate this new and emerging housing segment to grow strongly in the coming years, providing a new horizon of investment opportunities and housing options for the baby boomer generation.

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