April 28, 2022 |
Updated April 28, 2022
Design trends and resident needs are essential to successful development and operation of 55-plus apartment projects—and for delivering on investor goals.
Active-aging residential communities represent an attractive investment opportunity for savvy developers looking to build—and for property managers reinventing their apartment offerings. According to a recent report from CBRE, this burgeoning housing sector, often referred to as “active adult” or “55-plus,” targets “the healthiest and youngest segment of seniors:” Those falling somewhere between 57 and 72 years of age. What makes it so promising to serve this demographic group is their long median stay, in the range of five to seven years from move-in, and a low turnover rate of just 20%, compared to 50% for typical apartment communities.
Investors and property holders looking into this market are responding to the allure of an optimized return on investment. While the pricing for active-aging is higher than traditional multifamily, it is also lower than other senior housing types, say experts including CBRE and seasoned owners. This reflects the reduced operational labor, lower operating costs and generally more limited liability exposure the properties must bear. At the same time, the 95% average occupancy rates for active-aging rentals are better than other senior living, and the operating margins tend to be higher as well.
In this way, the active-aging model strikes a balance between keeping start-up costs and overhead relatively low while charging a decent premium over average rents in almost every market geography.
The Active-Aging Profile
This growth sector is still in its relative infancy. Without having the benefit of the many mistakes of others to learn from, there are myriad pitfalls for the unwary. Increasing the chances of successful development and investment requires an understanding of the emerging, rapidly growing 55-plus demographic and what they are looking for in apartment buildings and communities. Forearmed with this knowledge, successful developers work proactively with architects, designers and planners to anticipate the needs and desires of the prospective resident pool and build to provide appropriate solutions for residents who are purposefully graduating to a new lifestyle.
As seen in studies by Dallas-based three, the target resident pool for the active-aging community consists of recently retired singles and couples interested in downsizing from homeownership and forming ties within a close community of like-minded neighbors. They are making a conscientious decision to reduce their footprint as well as the time and effort spent on household chores and other responsibilities and looking to live in a community where they enjoy access to tailored amenities and activities.
Often, this conscientious decision involves a hope that this will be the last time moving into a new place. The active-aging resident will “rarely leave for any other reason than if they need assisted living or dementia care services,” according to CBRE. This desire to age in place helps explain the low turnover rates in these communities. To attract these renters in the first place, however, a host of other critical elements must be in place before the doors open and leases are inked.
Location and Amenities
The “active” part of the active-aging concept is a bit of a misnomer, as residents may or may not busy themselves with sports or community involvement, or anything else the word “active” evokes. The working definition of active-aging from the World Health Organization (WHO) describes the concept as “the process of optimizing opportunities for health, participation and security in order to enhance quality of life as people age.” The key word there is opportunities: These residents—predominantly Baby Boomers, a cohort known to place a premium on individual choice—want to have ready access to the widest possible variety of options.
Property owners and developers must first identify opportune locations for building active-aging rentals. Access to attractive amenities including dining, shopping, entertainment and other activities represents a major driver for these renters, so the ideal site will be within walking or a short driving distance of a core of such offerings. Then the project team must work to ensure more options for residents, using architecture and design to create a rich, magnetic place. For example, storage options both in the unit and elsewhere onsite are essential. Parking for at least one car—steps away from the unit, if possible—is a major attraction.
Just as critical is the resident experience. It should be tailored as much as possible to the expectations of the 57-72 age group. The desire to downsize means that units can be leaner and more efficient, with reduced overall square footage. For the prospective residents, compensation for the shrunken footprint should come from the overall community experience. Imagine a resident returning from a day or evening out, strolling past a lobby bar then out into a manicured courtyard—perhaps with a firepit or water feature—arriving finally at the unit and opening the door to be greeted by views of outside, then repairing to the spa bath to refresh. The resident will cherish a well-choreographed sequence of this kind through tastefully proportioned, flexible spaces, especially if it reminds them of the many options their chosen community offers.
Other ways to enhance resident experience include wellness amenities, indoor lounges, cafes, outdoor “rooms” and event lawns. Amenities shown to support the desire for a purposeful life, such as bookable meeting space, can add a different kind of allure.
The ideal unit for this resident pool is flexible, simple, intuitive, forgiving and spatially accommodating—all of which are basic principles of universal design, the industry shorthand for design that supports user access across age and the spectrum of ability. Since the goal is to support residents who likely wish to stay in the new residence for as long as possible, efforts to incorporate universal design principles should focus on how to ensure that means of access change as little as possible as abilities shift or deteriorate. For example, the same doors for entrance and exit, the same operable fixtures for plumbing, HVAC and electric; the same paths to and from onsite amenities and activities.
In other words, the community campus and the architecture should be intuitive enough to allow the prospective resident to envision both moving in and staying long term. It must then also support the long-term stay without the resident having to go to lengths or try to adapt as certain abilities shift or deteriorate. Instead, the unit and the community overall should continue to provide flexibility and ease of access seamlessly.
In addition, the desire for seamless transitioning is really at the heart of this expanding residential market. One of the most important attributes of this 57-72 age group as they consider a move away from homeownership is a desire to simplify, leaving behind the tedium of chores and upkeep to spend time on those activities that fill one’s daily life with a sense of purpose and meaning. Those universal design principles outlined above—flexible, simple, intuitive, forgiving and spatially accommodating—align neatly with the needs and desires of these new renters.
Simple and Intuitive
For example, an open floor plan layout with a kitchen island is optimal, as are spa baths, storage space that is easily accessible and connections to the outdoors via large windows. Offering even greater appeal are features like balconies that open into indoor-outdoor “great rooms,” and flexible spaces that easily serve as both a study and a guest bedroom offer yet more appeal. These programming and design guidelines for units have broad appeal, including for this diverse demographic that is known to be sophisticated and finicky, and especially for renters looking for a downsized option that offers comfort and ease immediately upon move-in.
It is worth noting here the Baby Boomer generation has largely adapted quickly and comfortably to the digital age, nearly as easily as their Generation X and Millennial counterparts. For this reason, the active-aging community should be equipped with robust Wi-Fi infrastructure so that residents may connect to the internet and each other quickly and seamlessly.
The above should serve as guidelines, and not as hard-and-fast rules. In fact, before design, planning or even site selection occurs, the development team would be well advised to engage in market research to understand as fully as possible the pool of sought-after residents. Such research might reveal, for example, that this cohort in a particular region would appreciate proximity to essential health care providers. This preference is more commonly associated with target populations for senior living communities and not typically associated with the active-aging population overall. Regional and economic factors may be at play for this and other considerations, making thorough market research invaluable.
It is also worth noting along these lines that research may indicate evolving preferences. The developer may want to work with the architect, planner and operator to build in flexibility that will make it possible to offer an active-aging residential community that continues to offer tailored yet diverse hospitality and care services as care needs and desires change over time. After all, the owner wants to avoid heavy turnover and the residents want to age in place. Anticipating the requirements of a changing landscape of service providers, amenities and associated technologies makes this a dynamic and challenging puzzle, and putting the solutions in place can make the challenge both fulfilling and potentially lucrative.
Rocky Berg, AIA, NCARB, SAGE, ASHA, is Principal, Senior Designer with Dallas-based three.