It’s Not Your Father’s Retirement

Active adult communities thrive as population bulge's leading edge moves into senior housing.


Stop by the recreation room for the typical “active adults” housing community these days, and you might have trouble stirring up a game of backgammon, bridge, or any of the other pastimes traditionally ascribed to older Americans.

More likely, the room will be filled with practitioners of the ancient Chinese martial art Tai Chi, or perhaps a Pilates class, or maybe a group of individuals surfing the Internet.

Indeed, the face of the typical senior housing community has changed, and it’s only the beginning.

With those on its leading edge celebrating their 62th birthdays this year, the Baby Boom generation has already christened the senior boom era, and is beginning to assert its inevitably huge impact on the senior housing industry.

“New senior communities are being built with the Boomer in mind,” notes Donny Disbro, VP of marketing for Lake Forest, Calif.-based Professional Community Management, which oversees 24,802 single and multifamily homes across 13 communities. He’s also a Senior Housing Council board member.

Disbro says management firms like PCM specializing in communities for active adults — defined by the National Association of Home Builders as someone between 55 years old and whatever age it is that they begin to require some form of assisted living — are thriving.
And numbers-wise, the prospects look even better for the future.

“Over the next few decades, we’re definitely going to see a significantly larger senior population,” says David Schless, president of the American Seniors Housing Association. “The U.S. population will very much resemble what Florida looks like today — about 20 percent of the population will be considered senior.”
Indeed, improvements in health care and the sheer size of the Baby Boomer population bulge will significantly increase the median age of all U.S. communities in the coming decades.

By 2030, men and women ages 65 and older will make up 20 percent of the U.S. population — up from about 13 percent today — with the senior population numbers doubling to 70 million, according to Harvard University’s Joint Center for Housing Studies.

For those who develop and manage senior housing communities, the question is, how many seniors going forward will choose to stay in their own homes?

According to the Census Bureau’s 2001 American Housing Survey, there are currently about 1.8 million households living in single-family or multifamily configurations within age-restricted communities. There are another 7.7 million such households living in communities that aren’t age restricted but include mostly residents who are 55 and up.

For decades, however, seniors have preferred to “age in place.” Currently, only about one in 10 Americans age 70 or older chooses to live in an age-restricted community — 7 percent choose some other kind of active adult or independent living situation, while only 3 percent opt for a community that provides assisted care, according to Harvard’s Center for Joint Housing Studies.

For his part, Schless thinks the Boomer generation will have a different attitude towards community living. “I think the Boomers will have a greater proclivity to move into senior housing,” he says. “They’ll be more comfortable with it and more familiar with it. But I think they’ll be much more demanding than their grandparents.”

As a new generation of seniors emerges who are, generally speaking, healthier, more active — and are holding off the need for assisted living provisions until much later in life — senior community pros are already noticing changes in market demand, and are trying to respond accordingly.

“The biggest difference between the senior communities built in the 1970s for the World War II generation and the communities being built today is that today’s seniors don’t want to be walled off from the rest of the community anymore,” Disbro notes. “They don’t want to be secluded in a box with only seniors around — senior apartments are looked at as places to become part of a bigger community.”

As Schless points out, the success of a senior community rests on its management. “This is much more of an operating business now,” he explains.

“You’ve got a lot more going on than just collecting rent and making sure the property is kept up. If you look at the senior housing industry in recent years, there are plenty of examples of communities that weren’t particularly well run and didn’t particularly fare too well as a result.”

In fact, the senior housing industry has encountered a wave of consolidation in recent years, as a number of players have found this out first-hand.

Those management companies that have remained in the industry have learned that, to succeed, they now must provide a range of compelling recreational activities — cooking and yoga classes, museum and wine-tasting tours, say — and high-end services — a concierge is now required, as is broadband Internet access.

“We sell the amenities more than the home,” Disbro explains. “It’s totally Nordstrom’s. You want the service.”

According to surveys conducted by the NAHB, walking and jogging trails were listed as the top amenities among seniors when choosing housing. Outdoor spaces in general — lakes and outdoor pools, specifically — are also popular.

“And in the coming years, you’ll see a range of services and programs that no one has even thought of yet become standard,” Schless says.

“Ten years ago, you didn’t used to see computer hook-ups in senior housing. Now they’re everywhere. The Baby Boom generation is used to having choice,” adds Wayne Sant, senior VP of development for Sunrise Senior Living, which is the nation’s biggest management firm for assisted living homes with 374 properties under its watch. “We’re spoiled in that we have always had choices. And the secret for building for this upcoming generation of Boomer seniors is to not have a one-size-fits-all approach.”

Certainly, the wallet sizes among seniors vary greatly. According to the Harvard Joint Center for Housing Studies, in 1995, 43 percent of white households 65 years and older reported wealth in excess of $150,000, but only 9 percent of Hispanic households and 4 percent of African-American households in that demographic did.

“There’s particularly a shortage of affordable senior housing for people below the median income,” Sant says. “We have a waiting list of about 500 people per project.”

Still, compared to seniors past, this incoming generation enjoys unprecedented wealth — and income.

Simply put, the generation moving into its golden years isn’t going to retire in the same way as its parents did. “Downshifting Boomers, in many cases, are professionals who will consult or start a new business,” says Joel Kotkin, a noted authority on urban development. “Retirement in many ways is an industrial-age phenomenon. If you’re a retired autoworker, you’re not going to build a few cars every once in a while to break the monotony. But if you’re a real estate agent, you might want to sell a few homes.”

Facing a burgeoning market that’s wealthier than ever, the senior housing industry — which currently enjoys an occupancy rate of just over 90 percent and is adding about 32,000 new homes a year — will have to add millions of more homes in the coming decades. That, too, will present its challenges.

In charge of developing communities for Sunrise in California and other Western states, Sant says resistance from residential home owners to senior housing start-ups is ubiquitous.

Younger owners of single-family homes consistently pose opposition to the development of senior housing in their neighborhoods, despite the fact that seniors — as a group — generally aren’t noisy, don’t commit a lot of crimes, and don’t drive the streets much. “It’s this not-next-to-my-single-family-home phenomenon we face everywhere,” Sant explains. “You sit in our public hearings, and you listen to the people complain, and the reasons for not wanting us there are not based on any fact, just their emotions.”

“In California, the average length of time between spotting a site and getting required approvals to build a senior community has reached a year and a half,” Sant adds, “and that’s with full waiting lists of seniors standing by. There are no-growthers in almost every city we deal with now.”

Maybe for now. But as the number of senior citizens living in the U.S. doubles over the next 25 years, big states like California, New York and Texas will be as old as Florida is today.

Such resistance could soon be futile.

Author: Daniel Frankel