Colorado Real Estate Journal - March 18, 2015
As the economy began to emerge from the Great Recession in 2011, Colorado’s Front Range became one of the nation’s hottest markets for senior housing and care developers, which kicked into high gear. Driven by low interest rates, plenty of investment capital, reasonable construction pricing and a conviction that the baby boomer generation would drive high demand, 2012 through 2015 has seen more than 5,000 new units open, and nearly 2,000 more currently under construction. The tide slowed in the past year, and many are wondering if we have already reached a saturation point for new senior housing and care. Many of the developers who were frontrunners are now completing the last of their new buildings in Colorado – for now. The remainder of this article will first look at what is being developed, where and by whom, and then will look at where remaining development opportunities exist. Colorado-based companies have driven much of the development since 2012. Some are larger, with several properties recently opened, under construction or planned, both in Colorado and other states. These include MorningStar Senior Living, Spectrum Retirement Communities, Christian Living Communities, Balfour Senior Living, Veritas Management and Columbine Health Systems. Newer Coloradobased entrants or those with a single property are busy as well, with openings or construction underway in the 2012-2016 period. Firms such as Rosemark Development, Wazee Partners, Zócalo Development, Frasier Meadows, McBroom Co., Macy Development, Glen Cos. and Mid-States Senior Living make up this category. The vast majority of new development by these companies is assisted living and memory care, along with some independent living, skilled nursing and marketrate age-qualified apartments. Development is spread from Fort Collins to Colorado Springs, but is unevenly concentrated in certain areas – more on that later. Developers from other states also are active in Colorado. Brookdale Senior Living (Tennessee) has been busy adding memory care units to several of its properties. Erickson Living (Maryland) is adding three new independent living buildings in its Wind Crest community. However, Oregonians are delivering the largest number of units, from metro Denver down to Pueblo. Anthem Memory Care, in partnership with LTC Properties Inc., opened four memory care buildings in the Denver metro area, and Bonaventure Senior Living opened two continuing care communities, one in Castle Rock and one in Colorado Springs, and has others planned in Denver and Pueblo. Active firms based in other states include New Dawn Memory Care (Arizona), Mainstreet Capital (Indiana), Advanced Healthcare Corp. (Idaho), JEA Senior Living (Washington), Legend Senior Living (Kansas), Horizon Development (Wisconsin), Choice Capital (Oklahoma) and Signature Senior Living (California). The affordable senior housing development community is extremely busy as well, with 11 new senior apartment properties that either opened or are set to open in 2014 and 2015. Affordable senior housing properties primarily are made possible using low-income housing tax credits through the Colorado Housing and Finance Authority. Developers include a mix of for-profit developers, nonprofit developers and local housing authorities. Some forprofit developers with new or under-construction affordable properties include Hendricks Communities, The Burgwyn Co., Koelbel and Co., Atlantic Development, McDermott Properties, Legacy Senior Residences, Wazee Partners and MEJansen Development. Housing authorities with new senior apartments include Aurora Housing Authority, Metro West Housing Solutions, Boulder Housing Partners, Longmont Housing Authority, Jefferson County Housing Authority and the Denver Housing Authority. Two nonprofit organizations, InnovAge and Accessible Space Inc., opened new buildings in Thornton and Greeley. So, given all that is already in the development pipeline, is there remaining opportunity and, if so, where is it? The answer is a selective yes, if it is the right product type in the right location. It is clear that current development is concentrated in certain housing and care facility types, and is unevenly dispersed geographically. Regarding housing and care facility types, most of the units under development or recently opened are either assisted living or memory care. Development of independent living apartments has been slower to return since the end of the recession, with only a modest resurgence of development underway. The newest independent living facilities to open have done very well, and there is additional demand in many geographic areas. Finally, a number of skilled nursing facilities, primarily focused on short-term rehabilitation patients, recently opened or are underway in metro Denver, Colorado Springs and Grand Junction – and there is probably more demand in other markets within the Front Range. Looking at specific geographic markets, some areas with the highest volume of new development are the southeast Denver metro area and southeast Aurora, the Broomfield and Westminster area and the northern portion of Colorado Springs. Yet, even in those areas, the communities under development are limited to certain types and there may be additional demand for other products. For example, most of the current development in Broomfield and Westminster is limited to assisted living and memory care. Opportunities are there if you do your homework to find a strong and underserved market, and then plan the right project with a highquality team. But, be sure to understand what is already in the pipeline, as many projects are underway or about to open.