The senior housing industry has long contemplated the “urban opportunity,” as large cities appear to be in-demand markets for retirement communities.
Plenty of developers are testing this hypothesis and breaking ground in high-barrier-to-entry cities such as New York City, Atlanta and Dallas.
To do this successfully, though, “it takes a willingness to jump through flaming hoops,” Dana Wollschlager, principal at senior living consulting firm Plante Moran Living Forward, said during a June 28 webinar hosted by Senior Housing News.
Perfect place for mixed-use
While the prospect of jumping through flaming hoops is daunting, there is a reason why senior living developers might be willing to do so. In many ways, cities are the perfect places to create senior housing projects.
“Some of the densest senior populations, and some of the wealthiest senior populations, are in urban areas,” Ben Burke, president of senior living at Chicago-based real estate investment holding and development company CA Ventures, noted during the webinar.
The latter group is the ideal target for senior housing developers.
“People who are coming out of homes, condos or high-rise buildings in urban environments, through the sale of their homes, are able to afford monthly rentals that are hefty but that are required to support not only the real estate but the cost of the operations,” Patricia Will, president and CEO of Houston-based senior housing provider and developer Belmont Village, explained during the webinar.
Belmont Village is currently building a senior living community in Chicago’s Lincoln Park neighborhood; the provider also recently opened a $55 million mixed-use senior housing community in Mexico City, Mexico.
Yet even if a provider is able to attract this wealthy client base, in some large cities, rents alone might not be able to fully support the project financially, given the high costs of land.
“Seniors housing, as a use by itself, can’t pay for the land,” Will explained.
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