Demand grows for retirement communities

Builders know it’s coming: a rising demand for hassle-free housing to accommodate the growing number of Americans entering their golden years.

The problem is, what kind of residences will they want, when will they need them, and how much gold will they need to pay for them?

“There almost has been an overbuilding in anticipation of this market,” said Tim Underwood, an industry analyst and former executive director of the Home Builders Association of Greater Kansas City.

“The issue is trying to figure out what the demand is. If you look at the baby boomers, it could be a real issue of people figuring out how the heck they’re going to live.”

The average age of people entering some type of assisted-living residence is about 85.

“The boomers are retiring now, but they probably won’t need our services for 20 years,” said Paul Williams of the Assisted Living Federation of America. “At that point there will be a tremendous demand for assisted living.”

But just what type of housing will serve that market is a moving target.

Senior communities

One prominent model for elderly housing in recent decades has been what the building industry refers to as continuing care retirement communities.

There are several in the Kansas City metropolitan area, the granddaddy being John Knox Village in Lee’s Summit. Construction on the 420-acre development began in 1969, and it now encompasses 1,400 residences ranging from freestanding homes and apartments to a skilled nursing center

But with entry costs at many of the units in the hundreds of thousands of dollars, coupled with hefty monthly fees, that continuing-care option may not be affordable to many people.

A report released in 2003 by the Joint Center for Housing Studies at Harvard University found only 23 percent of seniors had incomes of more than $25,000 a year, and 55 percent had incomes of less than $15,000.

Kelley Hrabe, president of Net Giver, a firm that develops affordable housing for the elderly, said the lower- and middle-income senior market would dominate the housing landscape in the coming decades.

“The point is, there’s a misperception that all these boomers are sitting on money with $4,000 to $7,000 per month to live,” Hrabe said. “That’s a big misperception.”

For Hrabe and a growing number of builders, the most popular housing option they’ve found for seniors is maintenance-free living provided by smaller apartment buildings or patio-style duplexes with attached garages.

His firm’s latest project, Pemberton Senior Living in Kansas City, Kan., is to open its 80 duplexes and triplexes this spring. The two-bedroom, two-bath units include a garage and rent from $475 to $775 per month.

“We have 350 people on the waiting list, which is an indication of the market,” Hrabe said.

Net Giver hopes to begin work this summer on a plan to build 266 senior housing units east of the former Baptist-Lutheran hospital complex at 6601 Rockhill Road.

The Rockhill Greens project calls for the construction of several three- to five-story buildings along Troost Avenue that would accommodate 90 assisted-living units, 40 units for memory-impaired residents and 136 units for seniors living independently.

The plan calls for additional investment by HCA Midwest in the former hospital tower, largely vacant since inpatient operations moved out in 2006.

‘We’ll be renters again’

Demand for affordable housing tax credits to subsidize apartment projects has risen along with the aging population. Fred Bentley, director of rental housing for the Kansas Housing Resources Corp., has noticed the change.

“Interestingly enough,” he said, “this application round we’re in now is the first time in the 20 years I’ve been here that we’ve received more requests for elderly-type housing than family housing, which underscores the changing demographic.”

He agreed with Hrabe that the most popular type of elderly housing was the two-bedroom duplex with an attached garage that often doubles as storage space.

“We do see a fair amount of requests to rehab old, historic structures into senior housing, including old hotels, schools and hospitals,” Bentley said. “Those historic structures also are eligible for historic tax credits.”

To qualify for affordable housing, residents must earn less than 60 percent of the median income in their community. In the Kansas City area, that cap is $29,640 for a one-person household and $33,840 for two people.

Jim Albertson, an independent broker with Lifestyle Properties, said the rental market for seniors had proven much more resilient since the downturn in the housing industry began a couple of years ago.

“I don’t think people in the housing industry anticipated how much of that market would go toward rental housing,” he said. “I’m a leading edge boomer. When we were younger, we started the apartment boom in Johnson County, and all of a sudden we’ll be renters again — two-, three- or four-plexes with small square footage from 900 to 1,300 square feet.”

In the meantime, Albertson said the market for buying senior housing had been hit hard by the current housing slump.

He cited Asbury Villas, an Olathe project geared toward active seniors, with 200 residences built in four-plex clusters, each having a two-car garage. The marketing plan called for the residences to sell for less than $200,000.

“As time went along, they started getting more expensive,” Albertson said. “The housing market crashed, and things stopped. We have been able to move units under $200,000.”

Epicenter of elderly

Where the housing for older people is being built also has become an increasingly important factor. Census-based marketing reports indicate the area around 95th Street and Nall Avenue is the epicenter for the over-65 population in the metropolitan area.

A senior housing development with more than 300 units in a three-story building already has been proposed for part of the nearby Meadowbrook Country Club, which recently was purchased by Caymus Real Estate LLC.

Dave Harrison, a partner at Caymus, said his firm still planned to pursue the project.

“We think the original senior housing plan that had been approved by the city has the same merit as before and hope to start the planning process again in the near future,” he said.

Albertson said similar infill projects should prove popular with seniors who want to move into obstacle- and maintenance-free residences but remain in their old neighborhoods. One such project is the soon-to-open Mission Square development, which he described as “fantastic.”

The 55-unit project is next to Sylvester Powell Jr. Community Center at Martway and Lamar Avenue in Mission. The residences range from 780-square-foot, one-bedroom units to 1,420-square-foot, two-bedroom units.

Entrance fees begin at $66,300, and monthly charges start at $978. The three-story development includes a community dining room, library, coffee shop, secure parking and a membership in the nearby community center and health club.

Mission Square is being developed by Essex Corp., of Omaha, Neb., which has developed 3,500 residences and currently manages 10 senior communities around the Midwest.

Doug Deines, development director for Essex, said the target market for the project was people over 60 years old who lived within five miles of Mission Square.

“The seniors we encounter in our marketing efforts in today’s market are looking for a lifestyle change,” he said. “This includes no home maintenance, packaged monthly fees, amenities, social activities and a well-designed community that they are proud to show off.”

‘Cruise-ship lifestyle’

On the top tier of senior living are the continuing care retirement communities.

As with Mission Square, there is an entrance fee, but these developments offer a continuum of housing that begins with an independent-living apartment and ultimately, if needed, leads to a skilled nursing facility.

One of the newer examples in the Kansas City area is the Tallgrass Creek development at 138th Street and Metcalf Avenue in Overland Park. It opened in 2007 and at this point includes 227 apartments. The 65-acre campus was designed to accommodate up to 1,500 units.

According to Jean Dennis, director of sales, Tallgrass Creek offers a “cruise-ship lifestyle” with ample opportunities for socializing. The 250 residents have more than 60 clubs they can join.

The spacious lobby and dining rooms have the feel of an upscale hotel. The 52,000-square-foot clubhouse includes a pool, fitness center and spa. There’s also a bank branch, health clinic, convenience store and library — even an in-house cable television studio.

Tallgrass is open to people 62 or older, but the average age of new residents is the upper 70s. It’s one of 16 similar projects developed around the country by Erickson Living of Baltimore.

It costs $165,000 to move into a basic two-bedroom apartment that includes 1½ bathrooms, a well-equipped kitchen and 1,049 square feet of living space. The deposit is refundable, either to residents if they leave or their heirs after they die.

There’s also a monthly service fee that includes all utilities except telephone and Internet service. The fee also provides for one meal daily and access to the health club and pool. For a typical two-bedroom unit, the fee is $1,855 for the first person and $637 for the second.

“One thing we struggle with is dispelling the myth we’re not affordable,” Dennis said. “When John Erickson started the company, the idea was to meet the needs of somebody like a schoolteacher with a pension.”

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