active seniors
Beth Burnham Mace headshot
Beth Burnham Mace

The market segmentation occurring in senior housing right now — with differentiation by price and service offerings including middle-market properties, luxury senior living apartments and active adult communities — means that “[t]his is a very interesting time for our industry today as it continues to evolve,” moderator Beth Burnham Mace said at Wednesday’s Leadership Huddle of the National Investment Center for Seniors Housing & Care.

Marketing segmentation “really isn’t surprising, given the maturity of the senior housing sector. It is not unlike what we’ve seen in other industries,” said Mace, NIC’s chief economist and director of outreach. The hotel industry, for instance, supports both Motel 6 and the Ritz-Carlton, and the retail industry has offerings that range from Costco to Neiman Marcus, she noted.

There’s a “huge opportunity nationally” for middle-market developers and operators to serve older adults who don’t need financial assistance but aren’t wealthy either, according to panelist Melissa Andrews, president and CEO of LeadingAge Virginia, which developed a playbook for interested providers. 

“NIC labeled it the ‘forgotten middle’ for a reason,” she said. “For the poorest among us, there’s subsidies. That doesn’t necessarily equal quality, and it doesn’t necessarily equal opportunity, but there is subsidized housing. For the wealthiest among us, we have options of choice because we can pay for it.”

One reason the middle market segment is attractive, according to Andrews, is that developers can repurpose existing buildings to fit their needs. That strategy doesn’t really work for active adult communities or truly luxurious apartments, she said.

Developers and operators in senior housing and multifamily housing are targeting active adult communities toward what Mace called the younger-older cohort, who are seeking community involvement and connection. The oldest of the baby boomers, who are turning 76 this year, is an ideal group for active adult community living, Mace said.

Ashley Fitzgerald, principal at the Carlyle Group, said that active adult communities outperformed all other sectors that the global investment group worked with during the pandemic. They are attractive to investors, she said, because of occupancy, growth and rent collection. One reason for the model’s success during the pandemic, in Fitzgerald’s opinion, is that the communities provided stability and socialization opportunities. 

“The physical product is very similar to conventional multifamily,” she said. “It just has an age-restricted quality to it, which offers a greater sense of community. …[R]esidents are living amongst their peers.”

Unlike other senior housing models, however, active adult communities do not offer amenities such as transportation, meals or medical services, she pointed out.

The segment of ultra-luxury apartments, Mace said, “is emerging and growing as we speak.” The communities offer older adults high-end concierge lifestyle living options with a multitude of amenities, she said.

Tom Gaston, chief investment officer of Inspīr Carnegie Hill/Maplewood Senior Living, said the company tapped into super luxury lifestyle apartments in 2015 and opened the first of the new brand on New York’s upper east side in 2021. The second Inspir property is being built on Dupont Circle in Washington, D.C.

“The idea is to feature bold design, central care, built-in technology and mixed experiences. Inspir is meant to go into cities … and satisfy a very discerning senior group, who tend to be well-traveled, highly educated and willing to pay for such services,” he said.

New York can support more such super luxury apartments, Gaston said, adding that Inspir is contemplating other properties in the city and looking for other opportunities on both coasts. He said doesn’t see a lot of competition coming into the market any time soon because of the costs involved in developing such communities, noting that projects such as Inspir cost $200 million to $300 million to build.

“It took years to develop this brand [and] the whole infrastructure behind it, and that’s a big deal,” Gaston said.