In a recent Houston Business Journal article, Jon Cruse reveals how luxury apartments have become highly competitive with single-family homes, creating new challenges and opportunities for homebuilders.
Follow the children. That’s what today’s leading developers of senior housing are doing – focusing on the adult children of America’s 75+ age cohort. Demand for senior housing (defined here as age restricted apartments, independent living, assisted living, memory care and nursing care) is being driven by a large, expanding and aging population base, with more than three hundred thousand people entering the 75+ age group each year. On top of that, the first baby boomers will turn 75 in the year 2021. In fact, the National Investment Center for Seniors Housing & Care (NIC) recently reported that absorption for this type of product continuously outpaced construction starts in 10 of the past 12 quarters (see the graph below), resulting in increased overall occupancy levels. In other words, the senior housing sector has a very attractive growth outlook.
That being said, it is important to also research and define the influence and impact that these seniors’ kids have on their decision to move into a retirement community. Our Vice President of Advisory Jon Cruse is an expert in the senior housing space, and outlined the following key conclusions:
Don’t just focus on the number of seniors in an area, focus on the number of adult children. Market areas where there are large concentrations of adult children (persons in the 45 to 64 age group) can often support a significantly larger supply of senior housing than would be indicated by simply analyzing the number of seniors currently residing in a given market.
The ratio of adult children to seniors can suggest demand potential from outside the area. Nationally, the ratio of adult children to the population age 75+ is 4.3. In comparison, Meyers recently conducted studies in Dallas-Fort Worth, Austin and Chicago submarkets and found ratios of 6.7, 7.0 and 11.8, respectively. These abnormally high ratios indicate that these markets have a large percentage of adult children whose parents may be residing elsewhere. As such, it becomes necessary to account for the anticipated pool of additional seniors in-migrating into the market as part of the overall demand forecast.
Adult children influence their parents’ choice of where to live. Our research shows that in many markets, more than 50% of residents in-migrate into the area because of their kids.
Today’s operators are marketing to the children, not the parents. Our research also shows that many operators are now recognizing the influence of the adult children and are now targeting and marketing their communities and services directly to them, instead of their parents.
In summary, the senior housing sector is massive and continues to grow. Today’s savvy developers are using market research to identify hidden opportunities by focusing on seniors’ adult children, giving a whole new meaning to “focus on the family”.
Contact us to discuss how we can help you with your senior housing development.