As Baby Boomers continue to age, senior housing will continue to be a valuable commercial real estate asset. Growth will provide significant potential for a high return on investment, especially as a long-term option for ground-up developments and value-added renovations. However, potential tenants face a dilemma: As national monthly rental rates of senior living facilities average between $4,000 and $7,000, many seniors without substantial assets are relegated to staying in their homes for as long as possible or choosing a subsidized living accommodation. Subsidized living accommodations have the unfortunate reputation of being lower quality or offering lower quality of care. By partnering with a third-party provider to offer service-enriched housing programs, this does not have to be the case.
To elaborate, services at senior housing communities can be implemented to engage residents and improve their quality of life. Within senior housing, third-party supportive services typically focus on health and nutrition, financial literacy, transportation and volunteerism. Health and nutrition support physical, cognitive and emotional well-being. Financial literacy covers things like retirement planning and the importance of making a life plan. Information about transportation and volunteerism helps to break down potential isolation barriers.
Promoting Social and Physical Well-Being
Service providers can also act as a liaison between the resident and their nurse or case manager to ensure they are always connected to the services they need. By creating a sense of value in the community, service-enriched housing programs subsequently bring stability to the tenant base and ultimately improves the bottom line for investors and developers. For example, data derived from financial statements from seven properties where Rainbow Housing has provided services show that within two years of resident service implementation, assets showed vacancy costs decreased by 7 percent, bad debt was reduced 34 percent, and turnover costs were cut 21 percent.
One way that a service-provider can enhance tenants’ quality of life is by eliminating social isolation and creating a sense of connectedness with fellow neighbors. By engaging in one of the many aforementioned services, tenants not only improve their lives but they can interact with other tenants who they normally would not meet if they never ventured out of their home. Researchers have long known about the benefits of “social capital,” which entails ties that build trust, connection and participation. This is especially imperative for seniors whose social capital tends to decline with age when they retire, when they lose friends and spouses due to death and illness, and when they relocate. Without such daily social contact and stimulation, seniors’ mental and physical health is affected.
Also, the challenges of understanding the plethora of health information available today are especially great for the U.S. population aged 65 or older, according to the CDC. This is problematic, as older adults have more chronic illnesses and use more health care services than other age segmentations of the population and face issues related to physical and cognitive functioning needed to find appropriate health information. A third-party provider offering service-enriching housing programs can implement health and nutrition education at senior housing properties to offer much needed support for seniors to age in place gracefully, and at their fullest capacity.
Services at senior housing facilities can also entail a designated call center to uniquely identify any needs that residents may have and to reach out to them with information about available programs and services. As such, residents are connected to resources that can resolve challenges or create opportunities for them to advance their life skills.
As senior housing is not a short-term investment, developers need to create long-term value, regardless of whether the property is high-end luxury or a subsidized living facility. This can be done through identifying development partners with proven expertise in senior housing, which can maximize future ROI. Furthermore, it’s important to select property management, onsite staff and the right service providers who understand the needs of senior residents. Such services provide a value-add to residents and are often encouraged by state-qualified allocation plans for tax credits.
An experienced social service team can provide the right services so that subsidized senior living communities can be successful, provide quality care for residents and bolster the investment outlook for owners and investors.
Flynann Janisse is executive director of Rainbow Housing Assistance Corp.