Page 24
— Multifamily Properties Quarterly — May 2016
F
or generations, the idea of
owning your own spot on
this great continent was an
integral part of the American
Dream. Yet, for the first time
in over a century, homeownership
nationwide has started to decline,
with major cities experiencing more
pronounced changes in the owner-
versus-renter landscape.
Primary culprits generally are
identified as more stringent lending
requirements and a younger gen-
eration that is more mobile. While
numerous studies are commissioned
to try to visualize the future housing
needs of the younger generations,
some savvy investors are looking
toward the changing desires of the
older, but not yet elderly, generations.
Approximately 20 percent of the
national population over the next 20
years will be made up of baby boom-
ers (people born between 1946 and
1964) as Americans are living longer,
healthier lives, according to the U.S.
Census Bureau.
Between 2010 and 2013, about
800,000 new renter households were
made up of baby boomers, and an
additional 2.2 million renters over
the age of 65 are projected by 2023,
according to Axiometrics, Joint Cen-
ter for Housing Studies of Harvard
University.
In Colorado, the over-55 population
is estimated at slightly more than
1 million people and is projected
to grow 12 percent over the next 10
years, according to the Bureau.
This is due in large part to the solid
economy of Colorado and the Den-
ver metro area, and statistics show
that over 15 percent of relocating
older adults are choosing to move to
Colorado, The High-
land Group reports.
Approximately 29
percent of relocat-
ing boomers are
moving to be closer
to family, and 26
percent are mov-
ing to reduce home
costs.
According to a
study by Epcon
Franchising, Denver
ranks sixth among
metro areas expect-
ed to experience
a significant housing gap for baby
boomers in the next five years.
Until recently, senior rental units
consisted primarily of subsidized
housing and restricted-rent develop-
ments where residency qualification
is based on income need. Market-rate
senior housing consisted of man-
aged-care campuses that start with
independent living, which generally
includes, at a minimum, some sort
of meal plan and the option to move
into higher-care levels as the need
arises. For many active adults, age-
qualified apartments are filling in the
gap between homeownership and
retirement-campus living.
Age-qualified, market-rate apart-
ments are popping up in desirable
neighborhoods across the country,
offering active, mature adults the
opportunity to live without the has-
sle of home maintenance in a com-
munity of people more likely to have
similar interests. They typically are
restricted to residents 55 years and
older (62-plus if Department of Hous-
ing and Urban Development). Proper-
ty managers report that the average
age for renters in market-rate, age-
qualified housing typically is in the
lower 70s, indicating that a portion of
residents are still employed.
Top priorities for residents at
age-qualified housing are location,
storage and security. Senior apart-
ments tend to be located in vibrant
neighborhoods with superior access
to community services and transpor-
tation. The residents are mobile and
want to stay connected with the out-
side community.
Project amenities are designed to
bring residents together since activi-
ties generally are resident-driven
as opposed to scheduled program-
ing prepared by the property. High-
demand project amenities include
swimming pools, fitness centers,
game rooms, theaters, business
centers and barbeque patios. Some
properties take it to the next level
with British-style pubrooms, putting
greens, workshops complete with a
range of power tools and community
gardens.
Much like typical multifamily units,
the finish level of the units reflects
the requirements of the target
income bracket for the project. Devel-
opers take care to provide multiple
storage options with bookshelves,
built-in desks and closet organization
systems in the units, and offer over-
size secure storage closets through-
out the property. Residents enjoy
entertaining and want the kitchen,
living room and dining room to
reflect a high-quality finish. Washers
and dryers in the units and private
outdoor space on a balcony or patio
are typical.
Rental rates at age-restricted senior
properties often are higher than
those found at traditional apartment
complexes. In exchange for higher
rents, residents expect a level of ser-
vice higher than standard apartment
complexes and want to get to know
the administrative and maintenance
staff. Once in place, these residents
move less often, and managers are
finding a willingness to sign leases
in excess of the standard 12 months.
Prospective residents have more time
to make a decision between compet-
ing properties. Inherent in the higher
rents are higher expenses for person-
nel and administration, security and
common area maintenance. Many
properties include some or all utili-
ties, allowing the rent to be set at a
premium for this convenience.
From the owner’s perspective, resi-
dents of this type of property gener-
ally are gentler on wear-and-tear
overall, and there is a lower rate of
turnover. While there have been few
transactions of age-qualified develop-
ments, capitalization rates are likely
to be marginally higher than all-age
projects due to being more manage-
ment intensive.
For the first time in generations,
demographics are shifting for
younger and older generations with
an increase in renting versus own-
ing. With home prices continuing to
rise, more baby boomers are looking
at downsizing now when they can
get the most money for their home.
While many will purchase a smaller
home and some will choose to move
to a retirement campus, market-rate,
age-qualified apartments are filling
in the gap, though how much the
market can handle remains to be
seen.
s
Laurel Barsa
Senior director,
Integra Realty
Resources, Denver
Niche Spotlight
