New senior housing projects demand big bucks for luxury living

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Developers are betting that as baby boomers age, demand for ultra-luxe senior housing projects with rents that can exceed $25,000 a month will skyrocket.

A joint venture of developer Related Cos. and Atria Senior Living, one of the largest US operators of senior housing, opened the first of its Coterie series of senior housing projects in San Francisco’s Cathedral Hill neighborhood earlier this month. Amenities at the 208-unit project include five restaurants, a rooftop terrace, an outdoor pool and a garden with bocce courts.

Monthly rentals range from $8,000 to over $25,000 per month including meals, housekeeping, concierge services and cultural programming. Like many of the new luxury senior housing projects, Coterie Cathedral Hill can support seniors whose needs range from no special care to assisted living and memory care.

Other developers targeting the luxury senior housing niche include private equity firm Kayne Anderson Real Estate, which has opened 13 properties with about 2,800 units and has one under development, a repurposed 1855 Greek Revival structure in New Orleans. Average rental units at the company’s Brooklyn project are $13,000 per month and include meals and housekeeping.

Developers are focused on developing upscale senior housing as some baby boomers — people born between 1946 and 1964 — are nearing the age when people typically enter senior housing, according to senior housing industry participants.

“Between 2005 and 2018, the population over 80 grew by 200,000 or fewer per year,” said John Moore, Atria’s chief executive. “Last year it grew by 325,000. Probably 450,000 this year. Over 600,000 next year.”

Most private senior housing operators target the middle class, charging average rents around $5,500 per month for assisted living, including food, housekeeping, and activities. In recent years, developers and operators have started to focus on more upscale niches, much like lodging companies have created new upscale brands.

“You’re starting to see segmentation in the industry,” said Beth Mace, chief economist for the National Investment Center for Seniors Housing & Care, an industry organization.

A depiction of a residence on Coterie Cathedral Hill.


Photo:

Related and Atria Senior Living

One of the pioneers of the luxury business was Vi Living, a company controlled by the Chicago Pritzker family, which is also a major shareholder in Hyatt Hotels corp

, according to Randy Richardson, the President of Vi. Founded in 1987, Vi Living plans to launch a new rental brand with a 320-unit development in Scottsdale, Arizona, Mr. Richardson said.

Groundbreaking is expected early next year, Mr Richardson said. “In the next five to six years, we could have 10 of these communities open or in development,” he said.

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Senior housing has been one of the types of commercial property hardest hit by the pandemic. Many people did not want to move into institutions because they feared infection and were cut off from their families by health regulations.

Conditions have steadily improved since the spread of vaccinations. The average senior housing occupancy rate in the 31 primary markets was 81% in Q4 2021, down from a pandemic low of 78.7% but still below the pre-pandemic rate of 87.6% in Q4 2019, it said Ms. said Mace.

Many of the new luxury retirement communities are in inner cities that have increased their rents because land prices and construction costs are high. Venture company Related-Atria also plans to open a 120-unit Coterie-branded facility in Related’s sprawling Hudson Yards development on Manhattan’s west side later this year.

“Seniors who are city dwellers want to stay city dwellers,” said Atria’s Mr. Moore.

write to Peter Grant at [email protected]

Corrections & Enhancements
Kayne Anderson Real Estate was incorrectly identified as Kayne Anderson Real Estate Advisors in a previous version of this article. (Corrected on March 22nd)

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