The state of the active adult: the “chameleon product” proves resilience to the pandemic and continues to evolve

Active rental adult communities were among the types of senior housing products with the strongest growth rates, prior to Covid-19 – and the segment has proven to be very resilient throughout the pandemic.

Active adult communities generated more interest from potential tenants, compared to independent living. Sales and marketing teams spent less time converting leads into accommodations. And the tenant demographics are younger and healthier than traditional independent residents.

But there are questions about how the product, still relatively new to the space, will evolve to meet future demand as more baby boomers retire and age in active adult settings.

These are some of the takeaways from a panel discussion at Senior Housing News’ 2021 Virtual Summit for Active Adults, featuring Beth Burnham Mace, Chief Economist of the National Investment Center for Seniors Housing & Care (NIC), and Alex Fisher, president and co-founder of Sherpa, a retirement home sales and technology company.

In many ways, the active adult cohort is assuming the role independent living played in the continuum of care 20 years ago.

The typical active adult consumer is in the 75 to 82 age range. But today, a 75-year-old is relatively healthier than someone the same age a generation ago. Plus, their life experiences are different, Mace said. Many baby boomers who are 75 today have gone to college, traveled, and lived in other common places such as dorms or apartment buildings.

This experience, coupled with demanding tastes, will help inform the configuration and scale of future active adult communities, intended to encourage socialization and engagement among residents.

“We’re going to see a different product that’s attractive to people who want to live in a group,” Mace said.

Pandemic resilience

There are a few reasons behind the resilient performance of active adults during Covid-19.

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First, communities were not subject to lockdown protocols that affected higher acuity care facilities and independent living, as working adults as a real estate class are similar to multi-family dwellings and therefore do not require a permit. exercise, Mace said.

Many active adult operators reported higher occupancy and move-in rates than their higher acuity counterparts. Communities Sherpa tracked averaged nearly four new moves per month last year – and communities in the top 90th percentile of artists have an average of six moves per month, Fisher said.

Turn-to-move-in conversion rates among active adult communities, meanwhile, have fallen from 30% in 2020 to 35% so far in 2021, according to data from Sherpa. Most impressively, the average sales cycle for active adult communities is faster than in independent living. In 2020, the time between the investigation and the closing of a rental in an active adult environment was on average 170 days, compared to 356 in independent living.

And the time active adult salespeople spent in the sales area, from survey to move-in, averaged 9.5 hours to 13.7 hours for independent living.

Community leadership was also instrumental in converting inquiries into accommodations. Executive directors of active adult communities did not have to deal with the ever-changing restrictions imposed on their communities by federal, state and local public health departments, allowing them to spend more time in work with salespeople and convert leads.

“They were able to spend more time [to assisting sales teams]”said Fisher.

Resilience is expected to continue in the years to come, given the large number of baby boomers reaching retirement age in the decades to come. Population growth over 75 is expected to increase from 29 million in 2025 to 45 million by 2040. Population growth among those aged 75 to 84 – currently the sweet spot for active adult renters, Mace noted – is expected to reach 21 million by 2025 and 31 million by 2040.

Developers in the space will find themselves with opportunities to create new communities, but must be aware of the type of product. The active adult rental period may be faster than for independent living, but it’s slower than traditional multi-family apartments, which are a major competitor for renters. Once stabilized occupancy is achieved, however, landlords will realize longer lengths of stay among tenants, as well as a rent premium over multi-family.

“It really is a chameleon product. It’s still evolving, ”she said.

Address the future drift of acuity

While the immediate benefits of active adult communities are attractive to investors and operators, they should also be mindful of the potential future drawbacks and challenges.

Notably, the likelihood of acuity creep is increased due to the longer residence time. Although the product is relatively new, many active adult communities are already assuming the role independent living played across the continuum of care 20 years ago, without the service components that make independent living attractive.

There are concerns about what will happen to active adult tenants as they age and need more services, Fisher said. Developers and operators must anticipate these needs and seek ways to support their tenants in the future.

An option may include pay-per-view or unbundled services, offered at an additional cost, creating a model of “light independent living” without completely transforming into independent living. Fisher thinks it’s inevitable.

“We can become more flexible in how we deliver services and how we charge for them, anticipating the needs of people who are going. [need them] – it will happen, ”she said.

Mace agreed that actors in the active adult space should be proactive in tackling acuity drift, given the large number of baby boomers over 75 gravitating to senior housing in the years. to come up. What she believes is certain is that the demand for choice that characterizes the baby boom generation can be part of the solution.

Active adult operators can partner with operators who deliver higher acuity care, creating a pipeline of residents who will eventually need assisted living services and cementing active adult communities across the continuum of care.

Or operators can partner with healthcare systems to offer clinical services to residents, which many assisted living providers are already exploring through Medicare Advantage plans. Mace believes these alternatives can be mutually beneficial for all stakeholders. Residents receive health care on site. Operators can free up staff time to maximize the building’s value proposition. And the health care provider has a captive audience of residents.

Mace also sees opportunities to co-locate active adult communities alongside traditional senior housing developments, placing the full continuum of care on one site. These are options developers and operators should consider when planning new communities, especially since they are looking for new, younger customers to fill vacancies and might be deterred from moving due to the drift. acuity.

“I don’t think we should hide our heads under the rug. [Operators] should be more open about what happens as you age in place, ”she said.

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