While the changes that will come with healthcare reform will not be fully in place for about a decade, the bill’s passage in March of this year has already altered dynamics in commercial real estate’s senior housing sector. Kohl Asset Management–a specialty housing, hospitality and senior living management and financial services firm–points out that with many details regarding government reimbursement still up in the air, seniors housing owners and developers are increasingly turning their attention to modern independent-living rental properties where government reform will have no discernible impact.
“With changes in healthcare coming, more developers are getting out of assisted living and focusing on independent living,” Lisa Kelly, director of multi-housing operations at Kohl, tells MHN. “There have already been some changes, and there will be more regarding Medicaid and Medicare reimbursement. It’s not definitive, but it is going to be difficult for assisted living and nursing homes to make a living.”
But Kelly notes that another dynamic beyond healthcare reform is prompting seniors housing owners and developers to turn their attention to independent living rental properties. “Given the state of the economy, many seniors are hesitant about buying into retirement communities, so rental communities have taken off,” she says.
With demand for assisted-living apartment properties on the rise, competition within this seniors housing sub-sector is on the upswing as well. Aging baby boomers are not the senior citizens of yesteryear. With advances in science and healthcare, people are living longer–and living longer in better health–and as a result, they are becoming increasingly interested in maintaining an active lifestyle. Coveted amenities range from business offices and libraries to expansive outdoor space and space for leisure and fitness activities. Kohl’s fee-for-service rental properties provide a broad array of amenities and à la carte services.
“At our properties, it is very much a service-enriched environment,” Kelly explains. “You have options for housekeeping, dining services, transportation to events and concierge services.” The list of amenities includes options for assistance when it becomes necessary. “We can bring in a lot of outpatient services and keep residents comfortable in their own homes.”
Additionally, Kohl’s communities provide an intergenerational environment. “You have everyone from residents 55 years and older who are still in the workforce and want the freedom of living in an apartment that can be taken care of while they travel to seniors who are in their 90s. It is a great dynamic.”
Kohl’s offerings at its independent-living properties are uniquely tailored to accommodate the demands of the modern senior. And by providing such rare but desirable services, the company has experienced great success. “Our communities are seeing significant growth because we’re offering something that hasn’t been offered in terms of amenities,” Kelly says. “Also, we offer short-term stays. They don’t have the pressure of being locked in for 15 or 20 years. It’s called our Trial Stay, but 100 percent of the time, they convert to full-time stay unless they are relocating for a job for a short period or are coming in to spend a few months with family.
The proof is in the pudding. “Approximately 25 to 30 percent of our residents relocate from competing communities because, with our amenities and concierge services, we are offering what a lot of places aren’t,” she adds. “A lot of seniors rentals don’t offer anything; you’re just renting an apartment.”