Daryl Carter recently published an interesting article in Seniors Housing Business regarding what he sees as opportunities for addressing “the overwhelming need for affordable seniors housing in today’s market”. Two of his points hit upon topics we have addressed before:
First, he encourages owners/investors not to over-improve their facilities. Although the trend seems to be to make communities more and more luxurious and with more and more amenities, those luxuries and amenities come with higher rents. As a result, seniors without significant savings and limited budgets can quickly find themselves priced out of communities. Carter quotes a report that 43% of seniors who pay more than half their incomes on rent rely on Social Security benefits – limiting what they can afford. Carter suggests investing in “smart” renovations that meet the needs of renters but also don’t break the bank, so that pricing can be kept affordable for a greater number of seniors. What is lost in increased rent can then be made up in higher occupancy and greater demand.
Second, he suggests renovating existing facilities rather than always building new. This is a double-edged sword, in that the older style of senior living communities are less attractive to potential residents. But Carter makes the point that renovations of existing properties can be done more quickly and at smaller expense than finding land, obtaining entitlements and then constructing from the ground up. Quicker completion means earlier move-ins of residents and a faster start to income generation.
Clearly, opportunity awaits for the owner/operator/developer who can find the sweet spot in developing a facility that both appeal to seniors in design and amenities but also offers an affordable price point.