Senior-Living Market Surges

With America's aging population, greater opportunities exist in the Southeast's expanding senior-living market.

By Debra Wood

With the first of the Baby Boomers turning 65 in 2011 and U.S. Census Bureau predictions that 20 percent of the population will be 65 year or older by 2030, developers and nonprofit organizations are creating more communities designed for aging adults. But unlike the straightforward institutional settings prevalent in days past, new facilities boast more amenities for active seniors and homelike settings for those needing assistance with daily living.

"Overall, we're seeing a continued upward spiral of growth in senior living," said Millard Choate, president and CEO of Choate Construction Co. of Atlanta. Choate has built about $175 million worth of senior-living projects.

"There's a proliferation of CCRCs [continuing care retirement communities], and there's been a large growth in independent living communities, age-restricted apartments with amenities and common areas."

advertisement

Choate attributed the growth to the 75 million people expected to reach retirement age within the next two decades and innovations in medical technology that are extending life spans. He said he also has observed an increase in retirement-age seniors with more disposable income seeking an active lifestyle.

Parc at Buckhead, which Choate Construction began building in the fall, represents a rental facility to meet that need. The 22-story, 400,000-sq.-ft., Atlanta-area tower will offer 193 luxury apartments, parking, swimming pool, clubroom and an array of services.

The project will have a stucco, cast stone and glass exterior. Rents are anticipated to range from $3,300 to $10,000 per month, inclusive of housekeeping, meals and other services, said Roy Dickson, president of Parc Communities of Atlanta.

"We expect to build many more of the full-service communities and are looking at other markets, from Washington, D.C., to Charlotte and over to Houston and Dallas," Dickson said. "We will expand this model. We see a great need for senior living without health care, which is our specialty."

Public Housing

At the other end of the financial spectrum, the Raleigh [N.C.] Housing Authority will include Carousel Place, a 55-unit, 63,000-sq.-ft., two-story, independent-living senior center in its 13-acre Chavis Heights redevelopment.

The project is funded through a U.S. Department of Housing and Urban Development Hope VI grant, a program designed to eradicate dilapidated public housing and replace it with mixed-income, mixed-use communities.

EST General Contractors of Dunn, N.C., broke ground last summer on Carousel Place. It was 20 percent complete in October, with contractors framing and putting in roof trusses, said Gail Keeter, director of development for the Raleigh Housing Authority, who expected the project to finish by May.

CCRCs

"The senior-living sector is always dynamic because it's a market-driven industry," said Lou Hethington, vice president of the senior-living group for Bovis Lend Lease in Charlotte.

Bovis focuses on the continuing-care retirement community segment of the market as opposed to freestanding independent or assisted-living facilities or nursing homes. CCRCs offer a variety of services and allow seniors to move from one level of care to another as their needs change.

"It provides an atmosphere for a couple to continue to enjoy life together, and when one's health fails, they are not separated," Hethington said. "There's a lot of money available focusing on this particular market."

In Atlanta's Buckhead area, Bovis broke ground in September on the 25-story Lenbrook CCRC for the Lenbrook Square Foundation of Atlanta. The 494,000-sq.-ft. tower, scheduled for completion in 2008, will include 142 independent-living units, 60 skilled-nursing beds, 15 assisted-living beds, three dining areas, meeting space and a fitness facility.

Hethington expected to begin construction early this year on a 670,000-sq.-ft. project called The Cypress of Raleigh, N.C., for Life Care Services of Des Moines, Iowa, a developer and operator of CCRCs. Hethington said Bovis prefers working with companies with a proven track record in the market because of the complexities of launching a new community.

"You want to follow people who are successful because there is a huge amount of risk in this," Hethington said. "The average cost to launch one of these is $5 million to $7 million. That keeps the sissies out."

Hethington estimated CCRC construction volume in North America at $2.5 billion to $3 billion per year, and he pegged the entire senior living volume at $5 billion. Nonprofit organizations fund construction through tax-exempt bonds and must presell 70 percent of the units before obtaining the funds, whereas private developers use conventional, bank financing, Hethington said.

He added that that most elderly purchasers sell their homes to move into a CCRC, so if the housing market suffers a decline, it will likely affect the CCRC market.

Hethington said the majority of these communities include 300 residences, with the campuses ranging in size from 500,000 sq. ft. to 1 million sq. ft. Bovis gets involved early in the process, about two to three years before groundbreaking, and helps define budgets.

The Weitz Co. of West Palm Beach also concentrates on the CCRC market. Fran Snook, senior vice president of Weitz Senior Living Group, said growth in the 75- to 80-year-old population group seems to be fueling the need for more of these developments.

The company recently completed the second phase of The Glenridge on Palmer Ranch in Sarasota, Fla., and has begun working on Westcott Lakes of SouthWood, a $120 million project associated with Florida State University in Tallahassee.

Westcott will have more cottages than multifamily construction, and Snook said there has been a trend toward larger units, some with three bedrooms.

"These [CCRCs] are getting larger and larger, which makes them almost like a small city," Snook added. "People don't ever have to go outside."

Pennybyrn at Maryfield in High Point, N.C., is expanding from a 125-bed traditional nursing home with a few cottages to a full CCRC, adding 131 independent living apartments, 19 cottages, 48-assisted living beds. Architect SFCS of Roanoke, Va., estimated the cost at $58 million.

Urban, Suburban

Senior living communities are sprouting up in urban centers and suburban settings. Choate is building Somerby at Alpharetta, outside of Atlanta, for Dominion Senior Living of Raleigh, N.C.

The four-story structure, atop a two-story parking garage, contains 188 apartments, a 106-bed assisted-living facility, three dining rooms, therapy pool and exercise room. It sits on an 18-acre campus.

Parc Communities also is building in Alpharetta, Ga. That age-restricted rental facility will have 210 units in a four-story building with structured parking. Dickson said he expects rents to range from $1,000 per month to $1,600.

Power Contracting of Palmetto, Fla., expects to complete an eight-story, 201-unit structural-steel and precast building during the summer at Jacaranda Trace Retirement Community in Venice, Fla. The complex includes condominiums, villas and an assisted-living center.

Homebuilders have entered the senior living market. Meridian Homes of Loganville, Ga., has three active-adult communities with single-family homes under way. The Villas at Winder in Winder, Ga., broke ground in 2005 and will be completed after Meridian sells all of the 153 lots. Home prices run from $149,000 to $167,800. It also is selling homes in The Oaks at Millcreek and Briarcrest, both with the same approximate price range as Winder.

Del Webb expects its new Sun City Peachtree development in Sunny Side, Ga., to open in 2007. The company plans 3,400 homes, ranging in price from $200,000 to $400,000. The project includes a clubhouse, golf course and resort-style amenities.

As seniors age, they need more services, but they and their loved ones are becoming more discriminating about the type of facilities where they will spend their twilight years. The industry is focusing on delivering resident-directed care in a more homelike setting.

Toward this end, the Greenville Hospital System in Greenville, S.C., is replacing its traditional, 45-year-old, 88-bed Roger Huntington Nursing Center with 12 single-story arts and crafts-style cottages, with common kitchens and living areas. Each cottage will have one bedroom.

"The challenge is trying to make a residential feel in a commercial application," said Scott Drake, manager of Triangle Construction Co. of Greenville.

Triangle Construction broke ground on the Cottages at Brushy Creek in January 2006 on the health system's new Greer Medical Campus. It includes the residential units and a community building with offices and a large multipurpose room. The cottages sit on a slab-on-grade foundation and are scheduled for a spring completion.

"It was at lot less challenging constructionwise because this is fairly close to residential construction," said Les Parks, administrator of Roger Huntington. "You still have to meet the institutional safety requirements."

Useful Sources:

Cottages at Brushy Creek
www.ghs.org/locations_Cottages.aspx

The Glenridge on Palmer Ranch
www.theglenridge.com/

Parc Communities
www.parccommunities.com/

Westcott Lakes at SouthWood
www.westcottlakes.org/