By Cara Aliek
Despite the ups and downs everyone is feeling in the current economic slump, one thing remains the constant in this storm: we’re all getting older. According to the American Association of Retired Persons (AARP), the number of persons age 65 and older is expected to grow to 70 million by 2030.
With this tidal wave of emerging baby boomers (age 45-64), new trends are emerging in the senior housing sector, which is likely to be commercial real estate’s silver lining in 2009.
Debt Metrics
The National Investment Center for the Seniors Housing & Care Industry (NIC), reports loan volume and performance remained strong for the senior housing and care industry during second quarter 2008. Loan volume placed was $1.55 billion, up 68 percent from first quarter 2008. Loan performance was tracked at 99.5 percent, with just 0.5 percent restructured or delinquent.
Robert Kramer, president of NIC, says this loan performance matched the all-time high, which was recorded in fourth quarter 2007.
“Similar to other commercial real estate asset classes, senior housing had not yet seen any significant deterioration in loan performance,” says Kramer. “In terms of loan volume, one must remember that these data results predate the disruptive market activity and tightened credit markets that took place in September 2008.”
The mean capitalization rate for independent living rose 20 basis points during second quarter 2008 to 7.8 percent. These figures are compared to 7.6 percent in the previous quarter and the spread ranged from a low of 6.6 percent to a high of 8.75 percent.
Likewise, assisted living saw a 20 basis point increase from the first quarter, going from 8.8 percent to 9.0 percent.
It will be interesting to take another look at these statistics at the end of 2009.
A Desire to Downsize
A new survey prepared for AARP found that one in four baby-boom generation households expects to move from their current home in the future, with the majority looking for a more comfortable or convenient option. In addition, 59 percent of those boomers expect to look for a single-level home.
A new development that already proves that prediction is Vineyard Lane, a vineyard turned condominium campus, located in Bainbridge Island, Wash. Developed by The Winery LLC, the project features flats, penthouses, cottages and townhomes ranging from 1,700 to 2,400 square feet.
The 4-acre site is attracting boomers that want a smaller living space but big opportunities outdoors. Hiking, biking and kayaking are popular year-round sports that keep seniors active, as well as day trips to local vineyards and state parks. Additionally, the campus is a quick ferry ride to downtown Seattle.
The property’s rustic feel, walkways, elevator access and level-front entrances are features that are drawing boomers to Vineyard Lane. A central social building provides residents with opportunities to dine together and enjoy entertainment. This property was also recognized with the 2008 AARP Livable Communities award.
Men On The Move
It has long been proven that women live longer than men. But according to a study by Brookdale Senior Living, more men than ever are moving into senior-living residences nationwide.
“We do have an upward trend in male move-ins, year to year,” says Glenn Sheriff, senior director of marketing with Brentwood, Tenn.-based Brookdale Senior Living. “The most significant numbers, however, are noted when looking at the overall trend from 2004 until now.”
One example showing the increase in male move-ins is a Brookdale property called Seasons at Glenview Place. It has seen a 75 percent increase in the number of men moving into apartments from 2004 to 2007.
“Our men’s club has become noticeably more popular in the last few years,” says Janet Franz, director of Seasons at Glenview. “In fact, our male population participates in many of our activity and outing options.”
So what are men doing now that they weren’t doing in the past? Some believe that they are learning to take better care of themselves.
The U.S. Census Bureau cites that 38 percent of deaths in the United States are due to four main causes: diet, physical inactivity, smoking and alcohol excess. But Dr. Kevin O’Neil, a specialist in internal medicine and geriatrics, says an individual’s relationships and sense of purpose are important factors too.
“Social engagement has now been shown to be a more potent predictor of longevity than age or medical conditions, therefore showcasing the powerful influence of relationships,” O’Neil says. “A senior-living community promotes and encourages social activity, therefore influencing a better quality of life for years to come.”