COVER STORY, AUGUST 2011

LOOKING FOR A LIFESTYLE
In senior and student housing markets, consumers seek communities that offer choice and customization.
Lara Fuller

At Shippensburg University in Pennsylvania, Cube 3 Studio LLC has designed a multi-phased approach to replace the university's on-campus housing. The project will contain 2,800 new beds in modern facilities that provide a rich on-campus living experience. © CUBE 3 Studio LLC 2011

Though student housing and senior housing cater to very different age groups, there are a number of trends that apply to both sets of demographics. Seniors and students are looking for a particular type of lifestyle and search out communities that fulfill that need. Though the recession has had an effect in most markets, properties that offer an enticing lifestyle and multiple amenities have fared well throughout the economic downturn. In the future, both sectors will likely see a rise in tailored, technologically advanced living.

Senior Housing

Senior housing used to be very limited in terms of options. Not too many years ago, the only option for senior adults was hospital-like nursing homes. The current trend is a shift towards lifestyle-based communities. “These days, it is all about lifestyle and amenities,” says Michael Smith, corporate director of public relations with West Point, Pennsylvania-based ACTS Retirement-Life Communities (ACTS). “One type of senior living community, called a continuing care retirement community, provides a combination of independent living, assisted living and skilled nursing care on the same campus so that residents won’t have to move again should their needs change.”

When it comes to amenities, many senior adults are looking for cruise ship-like offerings, such as fitness centers, indoor pools, auditoriums, bocce ball courts, libraries and multiple dining options. “Consumers in this sector really want larger living spaces and a variety of amenities,” says David Hegarty, president and chief operating officer with Newton, Massachusetts-based Senior Housing Properties Trust.

Seniors also want to be able to choose a floor plan and customize it. Some communities offer customization in the building process and others offer the ability to choose carpet, paint, appliances and countertops. “We are selling a lifestyle and experience just as much as assistance and healthcare,” says Smith. “It is all about providing choice and flexibility.”

Much of the change in the senior housing industry has been fueled by the baby boomer generation. Through their numbers, and desire for options in senior living, they are changing the way developers create and market senior communities. “The industry itself is still young,” says Hegarty. “It has only been popular since the mid-1990s. As baby boomers age, they are demanding more, including more amenities and technology.”

Baby boomers have also influenced the way the recession has affected the senior housing market. The property type has fared better than most due to the continuous need for residences. “There are positive dynamics for people in the space,” says Hegarty. “Demand continues to tick along with the aging demographics, which increases demand for the product type. There is little new construction at the moment, which really bodes well for the fundamentals.”

Occupancy has held up through the recession, dropping only from the low 90th percentile into the high 80th percentile. At the moment, according to Hegarty, occupancy is at about 89 percent. "There are a handful of projects in construction at the moment. Currently, less than 2 percent of existing inventory is in construction."

Demand remains steady in most markets, especially in the Northeast. “Different markets have been affected differently by the recession, but because we are a multi-site provider, we have been able to withstand the storm,” says Smith. “Overall, even in the recession, many people have expressed interest in moving into a community, with waiting lists in many areas.”

As the economy picks back up, demand for well-designed senior living communities will also increase. “We expect this industry to have the wind at its back in coming years,” says Hegarty. “When banks start to finance, development will come back. It probably won’t happen for a few years, but the money will flow for development.”

The recent changes in senior housing are only the beginning of what will happen in the market in coming years. “We are excited about the future of continuing care retirement communities,” says Smith. “It is one of the fastest-growing segments because it offers seniors the lifestyle they want and the security they need.”

Student Housing

There is also a constant demand for student housing product and there has been a shift towards communities that cater to specific wants and needs.  “Enrollments at educational institutions continue to grow, resulting in a steady need for student housing,” says George Scott, president of New York-based Educational Housing Services.

Student housing, like senior housing, used to be more about function and serve only the most basic purposes. Now, however, the same trend of lifestyle-driven living seen in senior housing is also found in student properties. Many students seek out properties where they can be close to campus, live near their friends, stay connected through technology and have resort-style amenities, such as pools, fitness centers, game rooms and gathering areas. “There is now a heightened awareness of technology integration,” says Nicholas Middleton with Lawrence, Massachusetts-based CUBE 3 Studio. “Students want wireless Internet, the availability of high bandwidths, connection to campus networks and green and sustainable living/learning environments.”

Many students also look for housing that is similar to what they had at home with their parents. They prefer open, spacious floor plans and they often want private bedrooms, private bathrooms and in-suite laundry facilities. “There is an increased desire for privacy and space ownership at all levels of the student experience,” says Middleton. “It is critical to balance this with amenity programs and common spaces.”

As with senior housing, the recession has not affected the student housing market as much as it has with other property types. “There is a growing demand for student housing, as many schools are experiencing increasing enrollment, particularly with out-of-state students,” says Scott. “Coincidentally, with the recession has come an increase of available properties to this market. Nationally, land and buildings are available at lower rates.”

Middleton has also seen continued demand in the student housing sector, even during tough economic times. “Our student housing business has continued to grow through the recession, with multifamily and other private developers working hard to get involved in this growth,” he says.

Student housing, both on and off campus, will continue to cater more specifically to the desires of students. Many universities have realized how much of a draw lifestyle-based student housing is for potential students and are renovating existing dormitories and adding newer, amenity-driven residences. “The distinction between market-rate apartments and student housing is diminishing,” says Middleton. “It seems clear that the overall quality and availability of student housing continues to have an impact on students’ choices, and is critical to maintaining a strong competitive edge for many institutions. There is a long-term demand for students going to university, and with that demand, student housing remains strong.”

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