The common wisdom is that empty nesters are selling their homes and moving into luxury rental or condo multifamily housing so they can access a maintenance-free lifestyle. Think of the implications if this trend is correct. Because the size of this cohort is so large, apartments today, especially those located in urban areas, would do well to target the 55-plus active adult category of the housing market and not just the Echo Boomers.
“We are effectively looking at multifamily mixed-use intergenerational housing as the future of the industry,” affirms seniors housing investment specialist Mel Gamzon, president of Senior Housing Global Advisors Inc. “There are huge opportunities in intergenerational housing models.”
By sheer numbers, these active adults will be a large component of the market for any type of housing. Much attention has been paid to the echo boomer population’s influence, but perhaps the active adults form an equally “big business” opportunity.
There are currently 79 million people in the U.S. over the age of 55 years, just slightly below the number of echo boomers. Households headed by the 55-plus population will comprise a whopping 45 percent of all households by 2019, compared to 38 percent today, according to research by the National Association of Home Builders (NAHB). The number of households headed by people in this cohort will “continue to grow,” says Stephen Melman, director of economic services at NAHB. Moreover, the 55-plus population is also well distributed throughout the country, currently comprising over 30 percent of all households in every state.
Builder sentiment with regards to the seniors market is also up and at the highest levels seen in a few years. NAHB’s 55-plus condo Housing Market Index posted a gain of 12 points to 38—the highest first quarter reading since the inception of the index. As for 55-plus rental housing, the present production index increased 12 points to 43 in the first quarter; current demand for existing units jumped 14 points to 56; and the future demand index climbed 13 points to as high as 58.
The question, then, is what appeals to this segment of the population? In some ways, what’s important to echo boomers also makes a difference to this population: fitness and community. “Fitness, wellness and preventative health maintenance” are the new catch words for the seniors market, Gamzon suggests. “We are talking about taking conventional apartments and communities that are recreationally oriented and integrating them with more wellness, fitness and preventative health-maintenance oriented facilities,” he says. Examples of programs may be yoga classes, fitness centers and spas—easily amenities that other age groups would be equally interested in.
Gamzon also notes that the seniors industry in particular is “evaluating current models and attempting to modify those models to accommodate the changing needs of seniors going forward.”
“Seniors of today, especially the Boomers, do not want to be isolated. They are mainstream,” he says. Facilities are no longer healthcare-oriented, but life-style oriented. Not only is intergenerational housing in ascendance, but also intergenerational living in a mixed-use context—where seniors housing would be placed next to conventional apartments.
Where they may differ from echoes lies in their financial capabilities. Robert Karen, chairman of NAHB’s 50-plus Housing Council and managing member of Symphony Development Group, says that this 55-to-75-year-old market is, “for the most part, the most housing equity-capable cohort in the nation.” The homeownership rate is up to 70 percent for this group, and they represent the largest percentage of homeowners in the country. Because of their age and experience, active adults are the most sophisticated renters and buyers in the market, says Karen. “They have a black belt in buying and renting because they have gone through the process so many times. They know what they want.”
These older customers are moving out of homes that they moved into 30 years ago, which they now view as obsolete. Like their younger counterparts, they have a desire for new apartments, open floor plans, light and airy spaces, and modern interiors, says Karen. Convenience is also highly sought after. “We find great rooms, higher ceiling heights, more light and more open living are desirable features for active adults.”
Karen stresses the importance of market research and studying both the individual market and customers when targeting active adults. “Every market has its own characteristics,” he says. “You need a very local body of knowledge in order to be successful.”
Nevertheless, he also asserts that fitness and community are among the largest motivators for the active adult category. Many of the newly retired “have worked very hard for a long time. The first Monday they retire, they do not know what to do with themselves.”
Much like the echo boomers, active adults are predisposed to amenities that allow socializing. Karen’s company has found that spaces that encourage residents to congregate, such as indoor or outdoor swimming pools and coffee or juice bars, integrated with fitness facilities, are very successful with this age group—just as cool lobbies are a hit with the laptop-wielding hipsters. Active adults also like to congregate with like-minded people with similar interests. So travel clubs, social events, water aerobics groups and bicycle groups are some of the more popular programs.
“You know that you have a winning social program when one of the residents says to you living here is ‘like going to summer camp year round,’” says Karen. Surely summer camp—which promotes a fun and active lifestyle—is something both the young and the old can enjoy.