Seniors Housing Business

OCT-NOV 2017

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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Page 24 of 47 25 October-November 2017 n Seniors Housing Business worked in sales for Del Webb. "I have seen some builders who try to run the gamut all the way from active adult to nursing care," says Ness. "For some people, that type of development will be ben- eficial, but by and large it really turns off a lot of potential active- adult buyers. I think most people would say, 'If and when that time comes, I will find a separate facil- ity that works for me, and move.'" "Even though it might seem like a logical progression, to us it seems like more of an assisted liv- ing facility that has villas on site, rather than an active adult com- munity that has the next stage of care nearby," says Ness. Gonzalez adds that current and future seniors are more likely to avoid communities that offer ser- vices or care because, frankly, they just want to have fun. "Boomers don't want a one-size- fits-all solution," he says. "They want their freedom and indepen- dence, and the ability to choose what they want and when they want it. "And, they don't want to be around 'old' people, which is why we are seeing more integrated 55+ communities within an all-ages master plan," continues Gonzalez. "Some may say that Boomers are afraid of dying, but I say that they are just focused on living life with complete gusto." Development fires up Annie Gerard, vice president for Beverly Hills, Calif.-based Meyers Research, has been con- ducting market research on the seniors housing sector since 1985. The level of development and interest in the active adult rental niche has never been higher, she emphasizes. Data is scarce on new develop- ment starts in active adult rental housing. It's a sector that is either not being tracked, or information gathering is still in the early stages of ferreting out age-restricted from traditional multifamily develop- ment starts. Gerard ran down a list of a num- ber of projects in the development pipeline to illustrate that the sector is strong: Greystar's luxury age- restricted Overture brand has 26 projects in the first phase, totaling $400 million. Phoenix-based Alliance Resi- dential Co. has a $1 billion com- mitment in apartments targeting the 55-plus crowd. Affinity Liv- ing Communities, part of the Oak Brook, Ill.-based Inland Real Estate Group of Companies Inc., has nine properties in development in the states of Washington, Idaho and Colorado. Austin, Texas-based Bonner Carrington is building nine of its Mariposa brands in Texas. In 2016, Atlanta-based Cortland Partners announced the launch of Attiva, its new active living community platform. And there are still many more to come. Definition of sector is elusive One challenge for data providers tracking this sector is that the cat- egory is loosely defined, not only for those measuring supply, but also in some cases for the devel- opers themselves. For example, Gerard performed a recent study OneStreet reorganizes company to capitalize on opportunities in active-adult rental market OneStreet Residential is evolving in response to a changing demographic in its home market of Atlanta. The company, originally founded in 1986, is building out the spokes of its portfolio thanks to steady demand from the empty-nest demographic. In 2003, OneStreet began developing mixed- income active adult rentals financed with tax-credit equity. In the wake of the Great Recession, the firm started to direct its focus on its brand of active adult properties called HearthSide. Today, OneStreet is preparing to start con- struction of its seventh iteration of Hearth- Side, in Fayetteville, Ga., where 40 percent of the units will be offered without income restrictions and at market rents. In January of this year, after 30 years of doing business under the Norsouth ban- ner, senior leadership bought out the compa- ny's founding partner, spun off its construc- tion division and rebranded as OneStreet Residential. The core idea of this reorganization is OneStreet's conviction that active adult rental — without care-based services — will become a significant slice of the housing market. The executive team is busy creating a vari- ety of products that will be uniquely branded along with a property management organi- zation specifically geared to serve properties where residents can "reimagine their lives, as part of an engaged, vibrant community," says Dave Dixon, OneStreet's senior manag- ing partner. For example, OneStreet is creating a luxury 55-plus product as well as 55-plus cottage- style rentals. Even with a large number of market-rate units where rents are being pushed aggres- sively, the firm's two existing brands, Hearth- Side and MainStreet, consist of properties that are currently 100 percent leased with waiting lists. Next up is MainStreet Breckinridge in Duluth, Ga., which opens in January 2018 and has already begun pre-leasing. In Johns Creek, Ga., OneStreet and Atlantic Realty Partners will open an as-yet unnamed 55-plus luxury project in February 2019. Nearly 1.4 million people in metro Atlanta are over the age of 55, the largest age cohort in the market, according to CoStar Group. That age cohort is project to grow nearly 19 percent in the next five years. The number of these Atlanta-area house- holds choosing to rent rather than own their homes is also on the rise. The data show that renters in the 55-plus age cohort increased by 55 percent between 2010 and 2017. One Street has always pursued a mixed- income philosophy for its properties. But it wasn't until recently that the company discov- ered the pricing power of market-rate units — even in affordable communities — driven by strong demand and lack of rental housing options for younger households in this age cohort. "We've seen almost unlimited demand for both the affordable and market-rate units," says Dixon. Dixon adds that the market-rate units at Hearthside Tucker generated rents that were above the market rate for non-age-restricted, conventional multifamily properties in the Tucker submarket. The non-income-restricted, two-bedroom, two-bath units at HearthSide Tucker leased at rates up to $1.78 per square foot, or $1,800 per month. According to Curbed Atlanta, Atlan- ta's median monthly apartment rent for two- bedroom apartments is $1,690. OneStreet's properties are amenity-rich, with robust social programming for people aged 62 or older, including outreach programs that connect residents to the surrounding community. Amenities include fitness centers, beauty salons, bocce ball courts, media rooms, librar- ies, computer centers and clubrooms with grand pianos and fireplaces. Dixon says that a larger proportion of mar- ket-rate units tends to drive down the average age of a community. "As this demographic grows, the existing housing categories will prove not to serve a large component of the Baby Boomer market," says Dixon. "Until recently, virtually all of the 55-plus rental housing in Atlanta consisted of inde- pendent and assisted living or continuing care retirement communities (CCRCs). But that's all seemingly begun to change in the past two years. We now see evidence of strong 55-plus demand in the resident profiles of conven- tional apartments." Dixon says OneStreet is particularly focused on building housing in markets with high bar- riers to entry and located on walkable sites near suburban town centers that feature res- taurants, shopping and churches. "We now understand the niche we're serv- ing as wanting a luxurious apartment home, but one that's tailored to the desires of folks who have lived a life, raised a family and focused on their careers," says Dixon. "They have a life perspective that's been shaped by that." — Lynn Peisner

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