The headlines only provide a glimpse of the market trend.
News articles in recent months have announced plans to build a 240-unit luxury senior housing complex on six acres of the Suburban Club, a 105,000-square-foot independent living/assisted living/memory care facility at the corner of Falls Road and Northern Parkway, two retirement communities on the grounds of Goucher College and Notre Dame of Maryland University, new senior communities within an office complex in Sparks and another commercial building in Towson, and the list goes on.
High-end fitness and other amenities have become a core part of senior living facilities. Photo courtesy of Nathan Cox Photography.
But beyond those headlines is a major demographic and market trend: The population of senior citizens in America is growing rapidly while the development of senior housing is failing to keep pace.
According to the National Investment Center (NIC) for Seniors Housing and Care, the number of senior residential units set to deliver nationwide in 2025 is 52,865. The total number needed to meet market demand this year is 103,547. By 2030, that housing shortfall will expand dramatically. NIC anticipates developers will deliver 191,032 units but the market will need a total of 755,252.
For senior living developers and experts in commercial real estate, construction and economic development, that situation presents enormous opportunities and equally big challenges.
Office-to-senior living conversion
In August, Broadmead found an uncommon solution to its search for a property to develop in Baltimore County.
MacKenzie Commercial Real Estate Services had been working with the senior living company “to identify growth opportunities whether that was land or existing buildings,” said Tom Fidler, Executive Vice President and Principal at Mackenzie. However, “in that quadrant of Baltimore County, we’re tapped out. There are not available sites to develop.”
Locating senior living facilities in mixed-used developments enables residents to avail of on-site amenities, like the concert series at Hunt Valley Towne Centre. Photo courtesy of Greenberg Gibbons.
The soft office market, however, had left a pair of Class A buildings on Ridgebrook Road nearly vacant and in receivership.
Broadmead’s development and design teams concluded that they could successfully convert the buildings, plus an adjacent office building, into an 80-unit, independent living facility. The 61-acre property would also provide space for future expansion.
The $21.4 million purchase penciled out to “about $92 a foot, based on existing buildings,” Fidler said. “Today, I can’t find 61 acres and build what they bought for less than three times that amount, so the economics here drove the decision matrix and were a very important part of all the stars aligning for this deal.”
Finding office properties that can be converted into residential is rare, but “there are plenty of [senior living] players out in the local marketplace right now, looking for land, looking for opportunities to expand or plant a flag,” Fidler said. On two office properties in Owings Mills and Towson, “some people are thinking creatively and looking to possibly follow in our footsteps.”
Key addition to mixed-use
At Hunt Valley Towne Centre, Brightview Senior Living found an excellent expansion opportunity in a stretch of underutilized parking space.
“When you looked at the plan, it felt like we were sandwiching Brightview in between parking spaces and loading docks, but the reality is there was thoughtful consideration as to how the building would fit into the overall intent of the project and best service the senior community,” said Eric Walter, President of Greenberg Gibbons.
Thoughtful design ensured that underutilized space at Hunt Valley Towne Centre became an excellent location for Brightview Senior Living. Photo courtesy of Greenberg Gibbons.
Smart design ensured the facility’s south-facing units would have views of Towne Centre as well as an array of patios, gardens and plazas, while its north-facing units and its restaurants would look out over expansive woodlands. The location would also give seniors access to shops, restaurants and entertainment, including Towne Centre’s concert series.
“Brightview mentioned that [Hunt Valley] was one of the fastest lease-ups they have experienced,” Walter said.
The addition of senior living into the mixed used community has funneled additional customers to Towne Centre retailers and other tenants, just as it did when Greenberg Gibbons enabled Capitals Senior Housing to develop a building next to the Wegman’s at Waugh Chapel Towne Centre in Crofton.
“We think senior living is a huge plus in a mixed-use development,” Walter said. “We are in the pre-development phase for two mixed-use projects — one in Richmond and one in Frederick. Both of these projects have the potential to incorporate a senior living community.”
Upgrading, expanding facilities
Faced with high interest rates, high construction costs and a dearth of buildable land, most senior living operators and developers are focusing on renovating and expanding properties for now.
“At least 75 percent of the work we have seen in senior living in the past two to three years has been renovation,” said Brett Stevens, Vice President of Wohlsen Construction. Senior living is Wohlsen’s largest market segment.
Source : National Investment Center (NIC) for Seniors Housing and Care
Those renovations, however, are geared to prepare senior living facilities for a looming spike in demand.
“We are seeing a desire by developers to make capital improvements to help rebrand their facilities,” said Michael Ginsberg, Executive Vice President of Chesapeake Contracting Group. “They are improving both their living facilities and enhancing their amenities. In some cases, they are taking what might be called a Class B or Class C facility and turning it into a Class A facility.”
Due to the time demand of entitling new developments, renovation projects enable developers to achieve those upgrading goals faster, Ginsberg added.
Some projects involve “upgrading common areas with new finishes – flooring, painting, light fixtures, plumbing fixtures,” said Dan Hannon, Vice President of Chesapeake Contracting Group. “Attention to detail has moved up the scale in the last few years. Creating pleasing colors, textures and a sense of home is a major focus.”
Many projects include construction of new amenity spaces — pickleball courts, putting greens, movie theatres, expanded gardens, arts and crafts studios, and fitness facilities.
At The Virginian continuing care retirement community in Fairfax, Wohlsen Construction completed a multi-phase renovation that included extensive landscaping, new outdoor amenities, completely new common areas, new dining facilities, a full wellness wing and a lobby renovation that added a grand staircase.
Growth spurt
The volume of renovation and new construction projects in senior living is significant, but not huge right now. Chesapeake Contracting estimates it prices two to three senior living projects each month. But experts in senior living say that volume is poised to change and soon.
Future senior living developments are expected to range from luxury independent living communities to care facilities, such as Queenstown Assisted Living. Photo Courtesy of Chesapeake Contracting Group.
Development of continuing care communities has been relatively quiet for the last two to three years, “but in the last nine months, we have been seeing a lot of activity, specifically in Maryland, to expand existing facilities and build more independent living space,” Stevens said.
Not-for-profit organizations are leading that development trend.
“They see the growth trajectory coming and it takes time to get these facilities approved and built, so some not-for-profits have decided they need to start doing something now,” Stevens added.
Meanwhile, some for-profit developers are starting to make master plans.
“They are looking at sites and focusing on specific regions, including the Baltimore-Washington corridor,” he said. “They’re looking at acquisitions of land. They are also looking to purchase aging, existing stock of senior living facilities that they can acquire at a pretty good value and then renovate and expand.”
One recent ranking of real estate investments, he noted, listed senior living as number two, surpassed only by data centers.
“I think 12 to 18 months from now, it’s going to be a completely different story in a positive way about the growth that is happening in senior living,” Stevens said.
Hannon, who describes himself as part of the “silver tsunami” that’s driving the demand for senior living, expects that growth spurt to take many forms from luxury developments in urban and mixed-use locations to more affordable housing options to new developments in Southern Maryland and the Eastern Shore that provide full amenities but in a more tranquil setting.
For local governments, that growth trend will come with the challenge of how to keep seniors in their communities.
A major builder of senior living facilities, Wohlsen Construction is anticipating a large uptick in development in 12 to 18 months. Photo courtesy of Wohlsen Construction.
“Fifty-five-plus and 65-plus are fast-growing segments of our population and, collectively, they circulate a lot of money through the economy,” said Jennifer Jones, CEO of the Howard County Economic Development Authority. “So, from an economic development perspective, it’s good to have them as part of your economic base.”
Howard County is the site of numerous existing and expanding 55-plus communities and senior living facilities. Many have located near mixed-use or highly amenitized areas, such as The Residence at Vantage Point, a continuing care community in downtown Columbia.
Howard County government, Jones said, is working to ensure that seniors can age in place in the county. It has created a senior tax credit, a livable homes tax credit and an aging in place tax credit to help long-term residents remain in the county.
Howard County has also become an AARP-certified Age Friendly Jurisdiction through a variety of initiatives, including supporting a mix transportation options, opening 50-plus centers, expanding fitness facilities for older residents, tailoring communications to older residents, and creating a trust fund to support affordable housing, including for the elderly.