The resilience of active adult communities during the pandemic and resulting recession has resulted in many developers, operators, lenders, and equity investors taking another look at the product and determining how it fits their strategy for future growth.
Many skeptics have become supporters after seeing the performance turned in by active adult communities through 2020. Active adult rental properties were already among the senior housing product types with the strongest performance prior to Covid-19. But the segment outperformed all other types of senior housing during the pandemic according to data from Senior Housing News. Active adult communities are outpacing Independent Living and attracting a younger and healthier demographic.
At a recent Active Adult Virtual Summit hosted by The National Investment Center for Seniors Housing (NIC), they shared the belief that active adult is taking over the role that Independent Living played in the continuum of care 20 years ago. While dining and other services are not typically included for active adult communities, several operators are offering a-la-carte services for additional fees to address the acuity creep that active adult communities will experience as residents age in place. Active adult providers can also partner with operators who offer higher levels of care, creating a pipeline of residents who will eventually need assisted living services.
For senior living developers and operators, several things make active adult attractive. The average age of entry for active adult communities is 75. Nearly 10 years earlier than the average age of entry for other types of senior living. More importantly, the 75-year-old today is typically healthier and more active than a 75-year-old a generation ago. Many of today’s 75-year-olds have attended college, traveled, and lived in other communal settings such as dormitories and apartments. The lease-up period for active adult, while slower than traditional multi-family, is faster than independent living, and once stabilized, owners will realize the longer length of stays and higher rents compared to multi-family.
The runway is long, and we are just at the beginning. The growth of the 75-plus population is expected to increase from 29 million in 2025 to 45 million by 2040. Since 1976 The Douglas Company has enjoyed participating in the evolution of the senior housing industry. The growth of active adult communities is the current chapter in that exciting evolution.
Bob Ritter
Director of Business Development
The Douglas Company
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