Millennials and Generation Z seem to get all the press these days. But not to be forgotten, the Baby Boomers! Baby Boomers, those born worldwide between 1946 and 1964, are now reaching the retirement age and many are looking to downsize. Considering that the population of Baby Boomers will outnumber children for the first time in U.S. history by 2030, what impact will this have on the real estate market? Will the seniors housing market be ready for the influx of seniors looking for assisted living?
All About the Amenities—Upscale Senior Living
Historically, senior living facilities meant a basic room, shared bathrooms, basic food options and little independence for residents. But today, assisted living facilities and senior independent living facilities are changing their tune. Facilities now offer countless amenities like five-star chefs, walking trails, massage therapists and beauty salons, to name a few. There are also active living adult concepts like Margaritaville that are reimagining what it looks like to live in a retirement community with Caribbean-esque vibes and Jimmy Buffet-inspired decor. Another example is the joint venture between Atria Senior Living and Related Companies, who have plans to bring a new urban luxury seniors housing brand to market in major metros, including partnerships with local healthcare facilities to offer personalized, quality care to residents.
Younger seniors’ occupancy is ramping up in a big way, but not to the traditional independent living options. The tendency is to locate in an active senior lifestyle community that offers tennis courts, a golf course and swimming pools together with a recreation center that has a fitness center, yoga instructions and other heathy activities has increased.
Upscale—Is it Realistic?
As enticing as these amenities sound, is it realistic for most seniors to choose to live in senior living facilities like this? Considering that approximately one in five seniors are living only on Social Security, probably not. Many seniors spend at least 50% of their income on housing, which leaves them with very little expendable money to live on. Ken Carriero, national director of Colliers’ National Seniors Housing Group says, “Although the larger national seniors housing companies strive to attract the higher private-paying residents, local and regional firms realize many of the senior citizen residents today are living solely on Social Security benefits as their source of income. Many states have implemented a supplemental program under Medicaid to assist those senior citizens with securing a place in an assisted living facility. These facilities will not have the amenities that higher-end facilities will have but they do provide a clean, safe and affordable place for seniors who need assistance with some of their daily living activities.”
There also exists a subset of seniors who are passing up the senior living lifestyle altogether. Instead, many are looking to independent living.
In its just-released 2018 Survey of Home and Community Preferences, AARP found that 76% of Americans 50 years of age and older prefer to remain in their current home, and 77% would like to live in their community for as long as possible. However, just 59% of older Americans think they’ll be able to stay in their community, either in their current home (46%) or in a different home still within their area (13%). There will be an opportunity for developers to bring more accessibility of what seniors need to them, says Ken Carriero. “Aspiring to live in your home for your lifetime can be accomplished with the development in computer technology and equipment. There are grocery delivery services, telehealth appointments with your doctor, bathroom accessories to help get in and out of the tub, stair lifts to go up and down flights, as well as home sensors and monitoring systems that can help you to stay more connected with family and friends.”
Although many seniors would enjoy staying in their home, it’s not right for everyone. Many factors need to be considered, not only by the senior citizen but also by the family members. These factors include but are not limited to family and friends living close by; local transportation availability; proximity to grocery stores, drug stores and doctors; and the amount of effort it will take to adapt your home for aging needs.
According to the U.S. Census Bureau’s 2017 National Population Projections, by 2030, all Baby Boomers will be older than age 65, representing a marked turning point in the demographics of the U.S. This means that 1 in every 5 residents will be at retirement age. This does not automatically translate to the real estate market having to find an assisted living facility to house them. Many will choose to downsize (or for that matter stay put altogether), some will look to upscale “non-traditional” senior living, while a section of the Baby Boomers will require assisted living, memory care or a nursing home. How big will each sector be? That’s anyone’s guess. Developers are banking on “if they build it, they will come.” Only time will tell.
This article was written by the U.S. Colliers Editorial Board, whose mission is to produce new and noteworthy commercial real estate thought leadership pieces to create conversation around proactive content. The Editorial Board focuses on CRE trends in the United States, and is comprised of Colliers marketing, research, communication and service line leaders.