As baby boomers age, the need for senior housing increases

Senior housing developers are in a field where ‘demographics are absolutely in our favor,’ says one developer

By Kathy A. Bolten

By 2050, 1 in 5 Iowa residents will be 65 or older, more than doubling the number of retirement-age people who live in the state, according to data from Woods & Poole Economics Inc.

It’s not surprising, then, that a growing percentage of new Iowa housing developments are geared toward older adults.

“You’ve got this massive wave of people coming, and a lot of them are starting to ask, ‘Why are we still mowing the grass? Why are we worrying about shoveling snow and repairing roofs?’” said Kris Saddoris, vice president of multifamily development at Hubbell Realty Inc., which began building senior housing developments about eight years ago. “It’s not unlike what a lot of our millennials have figured out – that they want to have that free time.

“So a lot of baby boomers are looking for that next step, that next place they are going to live.”

In the past 18 or so months, several residential projects geared toward people 55 and older have either been built in Central Iowa or are in the building or planning stages. The projects range from apartment developments targeted at active adults 55 and over to facilities whose sole focus is on people with mild to severe dementia, including Alzheimer’s disease. In between are owner-occupied condominiums aimed at older adults, so-called “age-in-place” facilities, and those for residents whose annual incomes exceed the median average and those whose incomes are below.

Not only is demand for various types of senior housing growing, investors are also becoming more interested in the sector primarily because investments in the properties have exceeded returns when compared to other types of assets. 

The positive return on investment is attracting more interest from private equity buyers and real estate investment trusts, according to the 2020 second-quarter report issued by CBRE National Senior Housing. In the first half of 2020, 88% of senior housing transaction activity was from private equity buyers and real estate investment trusts, according to the report. Four years ago, those two buyer types accounted for 58% of senior housing activity, the report said.

“The senior housing sector’s stronger performance may reflect the fact that senior housing has experienced continuous demand growth, despite significant fluctuations in the general economy,” the report said.

Aging baby boomer population

Iowa has more than 337,000 residents who are considered baby boomers, those born between 1946 and 1964, according to 2019 U.S. Census Bureau estimates. Half of those residents, or nearly 172,000 people, will be 65 by 2030. 

In addition, 42% of the state’s baby boomers – about 141,300 people – live in Polk, Dallas, Story and Warren counties.

Senior housing developers are in a field “where the demographics are absolutely in our favor,” said Julie Ferguson, senior vice president of senior living for Minneapolis-based Ryan Cos., which is nearing completion of construction on its Grand Living at Tower Place, a luxury apartment senior living project at 540 S. 51st St. in West Des Moines. 

“It’s a demographic that needs – and wants – this type of product,” she said.

And because baby boomers and those who are older live in communities all across the country, senior living developments “are not restricted necessarily to Florida or Arizona. There are a whole bunch of communities in the middle of the country and in the northern sections,” Ferguson said.

Grand Living at Tower Place is Ryan Cos.’ third senior living community in Iowa. The company previously completed similar projects in Coralville and Cedar Rapids. The company describes the apartments as “luxury style” senior housing.

“It’s about providing a lifestyle, amenities and the ability to do something that you can’t do in most projects, and that’s actually age in place,” said Eric Anderson, Ryan Cos.’ senior vice president of real estate development-senior living. 

At many age-in-place facilities, residents start out in an independent living section of a complex and when they need assisted living services, are moved to a different part of a building or to a different building on the complex, he said.

“What we’ve done is licensed four of the five floors [at Tower Place] so that you’ll be able to age in place unless you need dementia care,” he said. “You’re not going to have to move.”

Affordable senior housing

Awareness is growing regarding the need for affordably priced housing, not just for young adults or families, but for older adults as well.

“The more the population ages – and it is aging - the greater the need for affordable housing for seniors,” said JB Conlin, chief operating officer of Conlin Properties, a Des Moines property management and real estate development company. 

Conlin Properties is proposing to convert the former Hoak Elementary School at 1801 McKinley Ave. in Des Moines into 20 apartment units for older adults with limited incomes. 

The company is also proposing to build two 42-unit apartment buildings in northeast Des Moines at its Hilltop Apartment complex at 3722 Hubbell Ave. One of the buildings would be for people 55 and over; the other would be for families. At least 40% of the units would be rented to people who earned no more than 60% of the area median annual income. In Polk County, that’s $37,464 for a single person; $48,168 for a family of three. 

Whether the proposed projects move forward is dependent on receiving housing tax credits from the Iowa Finance Authority, which is expected to approve financial awards in September.

“The push toward senior housing in the affordable market is partly because [senior housing] is the darling of the market,” Conlin said. “It’s a newer sector of the industry. You can maybe sell the credits for a little bit more on a senior housing project than you can a regular family project.”

Amenities a necessity in senior housing

Amenities are an important feature considered by consumers when making decisions about where to live during their twilight years, experts in the senior living field say. 

It’s why places like Grand Living at Tower Place will include three restaurants, a 160-seat performance theater, a spa and salon, fitness equipment, a library and a pet spa. Slate at Gray’s Landing, a senior living apartment complex planned at Southwest 11th and Tuttle streets in Des Moines, will include underground parking with 127 stalls and a one-story clubhouse with an indoor pool, a fitness center, a community room, a spa and a hobby room. Hubbell’s Aventura, a 55-and-older condominium project that opened last fall in West Des Moines, includes a carpentry workshop, a car and dog wash, craft rooms, a library, conference rooms and a guest suite at which residents’ visitors can stay.

Nearly all senior living developments have fitness rooms, but the equipment in them is slightly different from what is found in other complexes, Hubbell’s Saddoris said. “You might have a stationary bicycle, but the one at [the senior living facility] is open in the middle so you don’t have to swing your leg over something to get on.”

But the amenity most older adults want is a sense of community, Saddoris said. “They are looking for those friends that are similar. That they can go play cards with.”  

The Des Moines area will likely see more senior living developments built in the coming years, Saddoris said. 

“We’re going to see more because of this wave of people – baby boomers – that is coming through the pipeline,” she said. “I think we’re going to see some different types of developments like single-family stand-alones.

“There’s just going to continue to be a huge demand.”