Developers pursue new plans for university-based communities while drawing on lessons learned from past experiences.
By Jane Adler
Developers are going back to school by teaming up with universities to build and expand retirement communities on campus. The move comes after an extended slowdown of university-based projects in the wake of the Great Recession, which curtailed home sales and limited the ability of seniors to move.
The downturn also crimped capital sources for big projects and understandably fueled caution at budget-conscious schools.
Fast-forward several years and the college market is showing signs of life. Several big new projects are in the planning stages. A handful of existing communities are renovating their facilities. Some are adding new units. Others are building skilled nursing wings to capture a slice of the post-surgery, short-term stay business.
However, there’s a major difference this time around. Developers and universities alike have learned some lessons from the downturn. Both parties are more attuned to what works and what doesn’t. They now have a better understanding of the best formula for success, although major obstacles to the developments still exist.
“The wave of the future will be projects with a tight integration between the academic and retirement communities,” says Gerard Badler, managing director at Campus Continuum, a consulting firm based in Brookline, Mass. “Everyone sees that those projects are more profitable.”
A feasibility study conducted by Badler’s firm for a community at Winthrop University in Rock Hill, S.C., showed that seniors were less likely to consider a non-university community even if it were priced 20 percent below comparable real estate in the area.
Universities and colleges have long had an interest in providing some type of housing for their retired faculty, administrators and alums. In fact, retired faculty who didn’t want to leave campus initiated some of the early university-based projects.
Retirement communities can provide a steady flow of income for the school in the form of land lease payments or other fees associated with the community’s operations.
The developer benefits too. The university provides a ready pool of residents and a marketing hook. The school also offers opportunities for residents to attend stimulating activities, ranging from sports events to lectures to fine arts performances.
Today, there are an estimated 100 university or college-related retirement communities nationwide. But the communities vary widely in nature.
A majority of the projects are continuing care retirement communities (CCRCs), which offer a range of housing from independent living apartments to assisted living and nursing care.
Most of the projects have only loose ties to the schools. In other words, the college does not own, operate or govern the community. Ziegler, the Chicago-based investment banking firm with expertise in the seniors housing and healthcare sectors, estimates that 88 communities fall into this category.
In most cases, the community is located in a college town and residents have access to some university events and classes.
Of the 84 planned CCRCs tracked by Ziegler, three will be affiliated in some way with universities. In these instances,
the university owns the underlying land, but will not operate the community.
For example, the University of Central Florida (UCF) in Orlando plans to sell or lease 60 acres for the development of Legacy Pointe, a new $100 million senior living community. The project is located in Oviedo, which borders the university.
The developer and owner is Continuing Care Retirement Development Corp. If approved by the Seminole County Planning and Zoning Board and County Commission, the 338-units project will break ground in mid- to late 2017.
In California, Belmont Village Senior Living plans to break ground in late October on a 176-unit rental CCRC at the University of California-Berkeley. Belmont has a long-term ground lease for the university-owned land, which is within a mile of the campus.
The community — preliminarily named Belmont Village at Berkeley — will offer independent and assisted living apartments, plus memory care units. Rental rates for a unit will start at $5,000 to $6,000 a month.
Belmont has a similar community in the Westwood neighborhood of Los Angeles, near the campus of the University of California-Los Angeles (UCLA). The project opened in 2009. It was not built on university-owned land, but the project has an affiliation agreement with the school.
Residents attend programs at UCLA and participate in classes at UCLA’s Osher Lifelong Learning Institute. The Bernard Osher Foundation sponsors educational programs for older adults at 119 higher education institutions throughout the country, and retirement communities often tap into these programs. Some of UCLA’s Osher classes are even held at the Belmont property.
At Berkeley, alums and retired professors spearheaded the new project, according to Patricia Will, president and CEO at Houston-based Belmont. They were familiar with Belmont’s UCLA project and wanted something similar in Berkeley.
Even so, it was not automatic that Belmont would be chosen as the developer. The process included a request for proposal that outlined Belmont’s plans, says Will.
Belmont was eventually selected as the developer, but Will notes that it took five years of navigating through obstacles before construction began. The obstacles included finding land near or on the campus, winning municipal approvals and working out the affiliation agreement with the university.
“It takes a lot of persistence,” says Will. The extended pre-development period also resulted in higher costs.
Andrew Carle is executive-in-residence for the Program in Senior Housing Administration at George Mason University (see sidebar, page 46). Even though the Washington, D.C.-based school has a vested interest in the sector, Carle has been unable to find land for a retirement project near campus. “We don’t have a retirement community here,” he says. “But it’s not for lack of trying.”
Navigating school bureaucracies takes time and patience, say developers. Universities and colleges usually have many layers of administrators and boards that must approve the project or even a loose affiliation agreement.
“The major obstacle is the slowness of the university administration to get on board,” says Badler, who conducts project feasibility studies for schools.
In conversations with Badler, university presidents generally hope to attract younger seniors who can be actively involved in campus life rather than those who might need assisted living or nursing care.
That preference of universities could foretell a shift in demand to more seniors housing on campus that does not include healthcare. “We think there will be more active adult communities on campus than CCRCs,” says Badler.
Meanwhile, existing campus communities are expanding and updating their facilities. The Forest at Duke, a CCRC near Duke University in Durham, N.C., recently added 15 new cottages that are already sold out.
The community is also undergoing a $10.5 million renovation that includes a new community center, fitness center, new dining venues and upgrades to the theater, including a “hearing loop” — a system that improves sound quality.
The non-profit Kendal Corp. — guided by Quaker principles such as equality, integrity and community — provides a number of services to its 12 affiliated communities, which are all CCRCs connected to a college in some way or fashion.
“Every Kendal community is going through a transformation,” says Sean Kelly, director of development at Kendal and incoming president and CEO of the organization based in Kennett Square, Pa. “We must meet new demand and accommodate changing preferences.”
A major expansion is currently underway at Kendal at Ithaca, near Cornell University and Ithaca College in New York State.
The $29.3 million expansion includes
– A new independent-living 24-unit apartment building with high-end finishes;
– A new skilled nursing center, increasing the number of rooms from 35 to 48, with a residential feel including a central kitchen, dining and living room, and adjoining outdoor space;
– A new central entrance and reception area;
– A new casual café and fitness center;
– The renovation of dining venues, common areas and other rooms;
– Improvements to the outside areas, including new walking paths, outdoor courtyards, patios and parking lots;
– The use of Leadership in Energy and Environmental Design (LEED) or “green” construction standards, wherever possible.
Kendal at Longwood entrance fees range from $70,400 for a studio apartment to $531,400 for a two-bedroom cottage with den and basement cottage. Monthly fees range from $2,877 for a single person to $7,116 for two people.
In 2012, an expansion was completed at Kendal at Longwood in Kennett Square, Pa., located near Swarthmore and Haverford colleges, among others. The expansion included 48 LEED-certified “green” cottages. The cottages are duplexes and feature geothermal heating and cooling, plus sustainable building materials. The new units are all occupied.
Kendal at Ithaca entrance fees range from $157,850 for a studio apartment to $542,800 for a two-bedroom with den cottage. Monthly fees range from $3,055 for a single person to $7,215 for two people.
Forging a bond
Kendal’s association with local colleges offers a competitive advantage, says Kelly. “A good relationship with a school provides a leg up to reach stable operations and a durable future.”
Other developers agree.
At its college-linked California properties, Belmont Village has established a priority waiting list for school alums, staff and professors and their family members. The Belmont project near UCLA has been 100 percent occupied
for each of the last 12 months. “The university affiliation is a valuable marketing tool,” says Belmont’s Will.
Consultant Badler says strong integration of the college and community can produce a more rapid lease-up. Alums, retired faculty and administrators are more likely to join a community closely tied to the university.
For example, findings from Badler’s feasibility study for Winthrop University suggested that residents should have access to programs and facilities on the campus, volunteer activities on and off campus, and ongoing social opportunities with college faculty and staff.
Despite the university’s interest, the project has stalled for a variety of reasons, according to a school administrator.
Kendal at Oberlin, in Oberlin, Ohio, has a strong affiliation with nearby Oberlin College. The school’s music department offers free concerts given by faculty and students, as well as other performances that are moderately priced. Kendal provides free shuttle service for the residents to events. Music students from Oberlin also perform at the Kendal community.
Residents can attend college courses for no credit and for no charge, and faculty members often give lectures at the Kendal community. Kendal staffers teach a course on aging at Oberlin and pair students with Kendal residents for assignments.
Many colleges don’t allow retirement community residents to take or audit classes. But those that do may have an advantage, experts say.
Lasell Village, a retirement community in Newton, Mass., requires residents to complete 450 hours of educational opportunities annually. “It’s a big reason residents move here,” says Anne Doyle, president at Lasell Village.
The CCRC features 182 independent living apartments, nine assisted living units and 38 nursing and rehabilitation beds. The community is located on the campus of Lasell College, which has about 2,000 students. The college owns and operates the CCRC.
To fulfill the educational requirements, Lasell Village residents can take classes at the school, travel or attend cultural activities. Some of the classes are held at the retirement community.
Those who register for classes are not required to take tests and quizzes or write term papers — unless they choose to do so. Residents do not pay for classes or to attend college events or programs. Some classes are even taught by residents.
“We are fully aligned with the college,” says Doyle. She belongs to the senior management team at the college and attends weekly meetings with the president of the college to explore opportunities between the school and the community.
“It’s a matter of making it happen,” says Doyle, happily noting the retirement community is full.