Real Estate Trends in the Senior Housing Sector

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Many communities have witnessed a dramatic increase in their older populations, and this trend is projected to continue in the coming years. In recognition of this trend, municipalities have started to map out strategies to better facilitate senior housing and to provide more options for seniors to safely age with dignity in the communities they call home.

Several of the emerging trends in senior housing intersect with other land-use trends, such as removing barriers to entering single-family neighborhoods, commercial building repurposing and replacement, collocating with public facilities and other incentives, and strategically navigating community stakeholders. These strategies, as well as general trends in the development of senior housing, are briefly described below.

  1. Providing housing and services in a non-institutional environment
    For reasons ranging from affordability to personal taste, an emerging trend in senior housing departs from the typical “multifamily building” type of independent or assisted living residential unit. The ability to downsize to a townhouse-style home with an elevator or to a small one-level patio home, rather than to an apartment-style building, is becoming more and more popular. Critical to marketing these types of communities is the ability to provide the level of services expected in a typical independent or assisted living facility, such as transportation, meals, medical care and recreational opportunities. While independent living and assisted living facilities typically are defined in local zoning ordinances, the type of age-restricted, non-apartment-style community with a high level of services described here often is not defined, so the ability to navigate local codes is important in meeting this emerging market demand.

  2. Building repositioning opportunities
    The growing issue of office vacancy, well-publicized in recent years, has only been exacerbated by work-from-home trends stemming from the COVID-19 pandemic. Fortunately, there is an opportunity at the intersection of office building repurposing and senior housing. Recent examples have proven the value of these adaptive reuse projects, which are generally well-received by stakeholders. The ability to put empty office buildings to productive use and help meet senior housing demand is an enticing proposition for local leaders. However, there are intricate nuances, in terms of design and regulations, associated with effectively converting office space to suitable senior housing units. Notwithstanding some positive momentum, many local policies and restrictions need to evolve to better streamline these adaptive reuse opportunities.

  3. Building replacement opportunities
    Similar to trends and opportunities related to building repurposing, there are ground-up opportunities for senior housing, to replace obsolete existing commercial buildings or unbuilt approvals for commercial uses. While the benefits of converting commercial properties to senior housing uses may be obvious, there can be headwinds related to legal restrictions and policy questions about compatibility of senior housing within commercial areas. Bolstering new senior housing with elements of affordability or other policy goals, such as pedestrian connectivity or environmental benefits, often can help these projects succeed.

  4. Incentivized local zoning approaches to help meet demand
    Creative incentives have gained momentum at local, state and federal levels to increase the production of housing, including affordable and senior housing.

    • Collocation with public facilities
      Collaboration between public sector and private entities (i.e., public sector housing departments with private affordable housing developers) can spawn much-needed affordable housing for families and seniors. Public facilities also may have land available for development that can logically take advantage of collocating needed affordable and senior housing with established resources.

    • Removal of policy and zoning barriers
      Accessory dwelling units have been headlining many of the legislative body agendas since the pandemic. While they elicit much controversy, they are an effective vehicle to combat the affordable housing crisis and to allow seniors to age in place with family members.

    • Tax incentives
      Tax incentives, such as relief from property taxes for certain redevelopment projects or assistance in the form of low-income housing tax credit funding, can help senior housing developments underwrite and facilitate the ultimate delivery.

  5. NIMBYism in the land-use process
    Many new development projects face not-in-my-backyard (NIMBY) opposition. It’s important to highlight that senior housing developments do not have the same impacts as traditional residential development in that there is no impact to local schools and minimal impact on the road network. In addition, local housing advocates can be leveraged to balance any opposition. A deep understanding of the political landscape and community dynamics is a crucial element of the development process.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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