The Silver Tsunami Finally Arrives

by Jeff Shaw

With baby boomers now aging into seniors housing in staggering numbers, how does the industry best serve this new generation of prospective residents?

By Jeff Shaw

For decades now, developers have been building up for a massive demographic wave of baby boomers aging into seniors housing. We’ve all heard the numbers: 10,000 Americans will turn 80 every day starting in 2025. By 2030, all 73 million boomers will be of retirement age.

The wave was nicknamed the silver tsunami.

With the first baby boomers turning 78 next year, the generation is officially of age for seniors housing. While the crest of the metaphorical tsunami is still a few years behind, the front edge of the wave is here.

Such a compelling trend begs this question: With all the talk about developing new communities to serve baby boomers, what do these new residents want and what do they look like?

Research firm ProMatura offers some insight. The company conducted a study of independent living prospects for the American Seniors Housing Association (ASHA) in 2001, and just a few years ago completed another in 2020. Comparing the two studies gives us insight into how the seniors housing demographic has changed.

“Prospects moving to an independent living community today are older, wealthier, frailer and more likely to use an assistive device than the prospects in 2001,” summarizes ProMatura.

According to ProMatura, today’s residents compared to 20 years ago are:

• 41 percent less likely to move to independent living before reaching the age of 80 and 76 percent more likely to move after reaching 85.

• 49 percent less likely to rate their health as excellent or good.

• 50 percent more likely to have fallen in the last six months.

• 33 percent more likely to have been hospitalized overnight.

• 27 percent more likely to use a cane.

• 128 percent more likely to use a walker.

• 100 percent more likely to use a wheelchair.

• 21 percent more likely to be limited in mobility.

• 80 percent more likely to receive home healthcare services.

• 29 percent more likely to have long-term care insurance.

• 147 percent more likely to have an annual household income of $100,000 or more.

• 148 percent more likely to have a net worth of $2 million or more.

• 68 percent less likely to live in a community with an entrance fee.

• 56 percent more likely to pay rent.

An even more recent study from ASHA and ProMatura, released in June of this year, added a few more notes on the current state of boomer prospects. The survey of 7,000 people showed what prospects are most interested in.

Respondents ranked full kitchen, laundry room with washer/dryer, living room, windows with natural light and additional storage as their top five in-unit amenities. Nearly 83 percent of respondents rated exterior home maintenance, lawn and landscaping, 24-hour security and maintenance of appliances in residence as essential or desirable.

But perhaps most promisingly: nearly 60 percent of respondents were considering a move in the next four years.

“These data points provide insight into how baby boomers will transform the seniors housing industry,” says Kristen Paris, vice president of market research at ProMatura Group and lead researcher of the most recent report.

Consider psychographics

In recent years, many developers have shifted their attention from demographics — the pure number of age- and income-qualified individuals in a given market — to psychographics. In short, psychographics takes a deeper dive into the seniors housing demographic and analyzes what sort of housing, amenities and neighborhoods they want. It’s more about how the target seniors think and feel than just a numbers game.

NIC MAP Vision, a source for seniors housing supply, demand and operational data, now includes psychographic data in its analysis of seniors housing markets.

“Use data to guide your decision-making process and do not assume that what worked in the past will work with this new generation of consumers,” says Kyle Gardner, chief operating officer at NIC MAP Vision. “Psychographic data can help operators understand a household’s preferences, family structure, educational history, political alignment and key topics potentially important to that household.”

Besides informing what types of housing and amenities seniors in a market may want, psychographics also tell operators the best way to advertise to those prospects.

“Industry stakeholders can use this psychographic data to inform messaging and strategy across their communities, such as website content, scripts for tour presentations, events with residents and potentially even building design, though that may warrant additional due diligence,” adds Gardner.

Mark Harris, senior design leader and partner at design firm BKV Group, says we’re already seeing the effects of baby boomers on seniors housing. The new resident “views wellness through a holistic lens, including community connection, lifelong learning and social engagement,” he says.

“This generation has been redefining retirement since the oldest members hit their mid-60s about 10 years ago. Many want to stay connected to their social and/or professional communities and plan to remain both active and productive, whether by volunteering or working part-time.”

“Because location is pivotal to affording boomers an opportunity to stay active, how a building relates to and connects residents with its surroundings is a key factor in urban senior living design,” continues Harris. “That’s why co-located developments — those that place complementary uses either in the same building or near each other — have become an increasingly popular approach.”

For a marketing approach, Harris notes that many of the baby boomer generation are choosing their own living situation, rather than relying on an adult child.

“They are opinionated and want input regarding their lifestyle arrangements. Marketing and sales teams should work to create a brand that is fully integrated with the development design, as this integrated approach will create a richness that will connect with prospective residents.”

Mix it up

Johnny Dagher, senior living practice leader at Baker Barrios Architects, summarizes the baby boomer generation as “tech savvy and well-travelled.”

“They value life experiences over material goods. Baby boomers also prefer more urban areas over isolation. Designing facilities that allow for baby boomers to continue to live, learn and interact with others will be key to a successful community.”

Flexibility is also key, according to Dagher.

“From a design standpoint, owners and operators need to develop facilities that can easily convert from independent living to assisted living, so that the independent living market is not left behind once baby boomers transition.”

If variety is the spice of life, baby boomers may be the first generation of seniors to truly embrace the idea. Choice and diversity are key to how boomers want to live in their retirement years, according to Harris.

“Right now, strategies like mixed-income, mixed-age and mixed-use are most prevalent in senior living (particularly active adult) communities. But given their undeniable advantages, we anticipate more developments offering varied and integrated levels of care will follow suit. 

“We are seeing some developers already planning their facilities to accommodate seniors who want the option to age in place with higher levels of care by incorporating flexible shell space or anticipating a secondary build-out for independent living and memory care. In addition, we are seeing some clients pursue comingled assisted living/memory care facilities that reflect a paradigm shift away from separated memory care in ‘lockdown’ within a facility. This continues to build on the idea of eliminating the isolation that has been traditional in senior living design.”

As an example of this concept in action, Harris cites a recent BKV-designed project, the 91-unit Newman Lofts active adult community that is located adjacent to Michigan State University’s campus in East Lansing, Michigan. Harbor Bay Advisors is the developer.

“The energy of Michigan State University campus life is right at residents’ doorsteps. The neighborhood offers plentiful cultural, recreational and educational options, and within the building, residents find — as an extension of their homes — a suite of lifestyle-oriented amenities.”

The development is immediately adjacent to the 273-unit Landmark on Grand River student housing community, also designed by BKV Group. “The development offers intergenerational fusion while fully serving each distinct demographic,” adds Harris.

On the mixed-use end, BKV designed Abiitan Mill City, an independent living, assisted living and memory care community in Minneapolis’ Mill District. The project includes ground-floor retail and outdoor recreational space. Public offerings include a fitness center where personal trainers work with residents and non-residents, restaurant that doubles as the development’s dining hall, music center and a parkway along the Mississippi River.

“The mixed-use design at Abiitan Mill City lends itself to community engagement, but let’s consider other ways to create similar connections through existing spaces,” says Harris. 

“An indoor pool might be used for exercise classes and therapy contracted with a third-party provider in the community. The barber/beauty shop could deliver spa services such as manicures, pedicures and massages facilitated by local businesses. Peer-led educational programming or courses taught by local colleges can be held in lounges or other larger spaces.”

Affordability still a concern

The penetration rate of seniors housing — the percentage of age-qualified residents that have chosen to live in seniors housing — has reportedly held steadily around 10 percent for several decades. On one hand, that’s a good thing. As the number of seniors grows, a steady penetration rate means the number of occupied units will increase.

But NIC MAP Vision’s Gardner suggests that improving the penetration rate and making seniors housing more affordable for the middle class walk hand in hand.

“The majority of seniors housing inventory currently available is tailored to serve high-income seniors. Therefore, this historical penetration rate is best suited for analyzing products aimed at serving a similar demographic,” says Gardner. “This historical trend is less precise when applied to new product types, such as active adult or middle-market offerings, because these products were not as prevalent in historical supply and are aimed at different consumers.”

NIC’s research shows that less than half of middle-income seniors will be able to afford the average seniors housing and care costs in 2029. The original 2019 “The Forgotten Middle” research paper says that 59 percent of seniors will have annual financial resources of $60,000 or less, making them unable to pay for assisted living.

“If we, as an industry, intend to boost the adoption of seniors housing products, we must develop products to serve seniors of all backgrounds, including middle-income seniors and their families,” concludes Gardner.

By way of advice on how to improve affordability, Dagher again returns to the idea of flexibility.

“Build fewer amenities and more multi-purpose rooms. Most facilities built in the last 10 to 15 years tried to incorporate a lot of amenity areas that may not be used enough to justify their costs of construction. Operators need to evaluate their facilities to determine what amenity areas are truly getting utilized versus ones that are not.”

He also suggests that adaptive reuse projects are a great way to lower construction costs, leading to lower rents.

What’s more, middle-market seniors housing supply was already lagging demand before the effects of the pandemic and difficult economic factors slowed development down even more. 

In 2017, NIC forecasted that it would take 17 years at then-current construction rates to build the additional 750,000 seniors housing units needed to serve the middle-income market. In the years since, NIC MAP Vision data shows that construction timelines have extended on average and construction starts have slowed.

“We see a massive opportunity for investors and capital providers to fill the supply-demand gap and ensure that tomorrow’s seniors are well served and taken care of,” says Gardner. “This could happen in the form of developing new seniors housing assets or being a pioneer in developing active adult or middle-market products.”

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