Active Adult: Moving Upstream to Attract the Younger ConsumerConsiderations for nonprofit and
for-profit senior living providers
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 1
Active Adult: Moving Upstream to Attract the Younger ConsumerConsiderations for nonprofit and for-profit senior living providers
As healthcare acuity continues to rise among assisted living and independent living
residents, savvy providers are finding ways to expand their reach across the care
continuum. While this often means branching out into services such as in-home care and
insurance products, increasingly providers are opting to stick to the business of service-
enhanced real estate. The difference is a new focus on enticing the younger segment of
older adults—with an active adult strategy.
Providers—particularly nonprofits—who offer assisted and independent living but choose
not to pursue an active living and hospitality expansion may miss the boat. According to
the 2019 State of Senior Living Survey conducted by Perkins Eastman, about 80% of the
providers who responded to the national survey think “technology, products and services
that allow consumers to be autonomous and proactive in their care will have the most
impact on the senior living market.” Active adult communities are an attractive option to
provide that autonomous, wellness-centered environment by focusing on lifestyle over
health care.
With benefits to both the residents and the bottom line, active adult lifestyle offerings are
likely the way of the future. This white paper will discuss the considerations around adding
a business line focused on life enrichment for younger seniors, rather than the traditional
healthcare model.
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 2
Strategic planning and active adult housingWhat is the building type and who owns it?
Bringing an active adult lifestyle offering into
nonprofits’ strategic planning conversations is
important for the future of these organizations,
particularly if they want to compete with for-
profit developers that are pursuing this market.
“I’m surprised by how long it has taken the
industry to realize it is selling two different
things: care and also lifestyle,” says Vernon
Feather, principal for Roanoke, Va.-based SFCS
Architects. “I think for most nonprofits, when
they began, their mission was about care. It
has taken a while, but they have been able
to reinvent and consider what is the lifestyle
advantage they are providing.”
The clinical mindset still drives many providers’
business philosophy, but it’s not the right kind
of message to attract younger older adults
into active adult communities. With this pivot,
providers should commit to the idea that this
product will not be part of their healthcare
business — it will become a new life enrichment
business.
What is active adult?
By appealing to a much younger target
audience—one that is 55 and older—active
adult housing typically:
• Does not offer a healthcare component
• Does not offer a dining component
• Provides freestanding or condo-like
units with floor plans that offer multiple
bedrooms, dens, and kitchens
• Offers low-maintenance outdoor space
• Has a limited common area that can be
used for gatherings and events
• Employs significantly fewer full-time
staff than traditional senior housing
Yet given these differences, providers have
a major opportunity to simultaneously
capitalize on their expertise in housing,
capture a brand-new consumer audience
who is 55 to 75 years of age, and begin
developing a relationship with consumers
well before they have care needs that signal
a move to senior living.
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 3
While some nonprofits might argue that active adult communities may not align with their
mission, findings from the more than 80-year-long Harvard Study of Adult Development
suggests otherwise. Providing a community that helps cultivate and nurture fulfilling
relationships, which is a focus among active adult communities, would lend itself well
to the mission of many nonprofits. The researchers argue that strong, secure, fulfilling
relationships help “protect people from life’s discontents, help to delay mental and physical
decline, and are better predictors of long and happy lives than social class, IQ, or even
genes.” Because of these positive effects, it’s possible that an active adult environment may
in fact improve residents’ long-term health and quality of life.
Additionally, a move into the active adult market can offer:
• More options for more consumers. These options might include condos and rental
apartments, single-family homes, duplexes, and other formats.
• Various price points and pricing models. These can appeal to a wider array of
individuals: ownership or rentals versus the traditional entry-fee model that is common
in CCRCs.
• Access to the home- and community-based care (HCBC) market. Providing an “IL
light” option can expand this access.
• A middle-market solution. The ability to provide an option for middle-income seniors
who cannot afford the traditional nonprofit CCRC.
• New business channels. A prospective avenue into home care can be provided to
residents of the active adult homes.
The opportunities are vast, but there are many nuances to evaluating this opportunity,
especially since many nonprofits considering active adult will need to make drastic changes
to their business models in order to pursue this market effectively.
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 4
Preparing for the shift
Before considering changes or repositioning during the strategic planning process,
providers must assess their core philosophies with respect to the consumers they wish to
attract today and the future envisioned for the organization.
When it comes to future planning, this means thinking about a new approach and
considering whether they have the ability to pivot accordingly. For some, this will mean
redefining the organization’s vision and traditional building type. Many organizations wait
too long to have this conversation about change and miss the required questions they need
to ask about their strengths, weaknesses, and priorities for the next five to 10 years.
“Offering ownership of the asset may be a sticking point to some nonprofit providers,
but you don’t have to own the asset and take on a huge debt as a result,” says Dana
Wollschlager, partner and practice leader for Plante Moran Living Forward. “The role of the
provider in active adult is to give support to the community and to facilitate socialization
and the lifestyle the residents want.”
Rental Own% of Total Construction
2009 2010 2011 2012 2013 20152014 2016 2017
Age-Restricted Multifamily Units
Construction Completed
30
25
20
15
10
5
14%
12%
10%
8%
6%
4%
2%
0%
Nu
mb
er o
f Un
its
(in
th
ou
san
ds)
% o
f all
Mu
ltif
amily
Co
nst
ruct
ion
Co
mp
lete
d
Source: U.S. Census Bureau Characteristics of New Housing for Multifamily Units by Age Restriction
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 5
Because active adult housing competes with non-age
restricted housing such as condos, co-ops, multifamily
housing, and apartments, these properties should be
examined during market feasibility studies. The graph
on page 4 indicates the positive trend of completed
construction for age-restricted multifamily units across
the country from 2009 to 2017, indicating the growth
and demand is there. This is supported by the fact
that the 2017 American Housing Survey shows a 17%
increase in the share of participants living in an age-
restricted community from 2015.
Also consider that the decision-making process is different from a move to senior housing
because a prospective resident might already live in a comparable housing product such
as multifamily. Vacancy rates have been consistently decreasing since 2009, as illustrated
in the chart above, which supports the increase in construction of age-restricted units.
While not every prospective resident will be willing to move into an active adult product,
decreasing vacancy rates support the idea that there is demand for more product.
2009 2010 2011 2012 2013 20152014 2016 2017 2018
12%
10%
8%
6%
4%
2%
0%
U.S. Rental and Homeowner Vacancy Rates
Rental Vacancy
Homeowner
Vacancy
Source: U.S. Census Bureau Housing Vacancies and Homeownership
17% increase
According to
participants in a 2017
survey, there was a
17% increase in those
living in age-restricted
communities
Source: 2017 American Housing Survey
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 6
The lifestyle behind active adult living What programming does active adult offer?
For those embarking on an active adult expansion, the amenities and programming must be
radically different from what is offered
in current senior living. Activities and
amenities that appeal to an assisted
living resident, for example, likely
will not align with the aspirations of
someone moving into active adult
housing. A decision as simple as
providing a bar with alcohol can make a
vast difference, Feather says.
“Many nonprofits have resisted offering
alcohol, but it’s such a social driver,” he
says. “Old communities were designed
around the sedentary idea that
everyone is going there to relax. There’s
not a lot going on. The focus now has to
be that there is a lot going on. Wellness
is front and center.” It can be argued
that providing this type of setting will
actually help longevity of residents,
given that a study out of Brigham Young
University shows that “having social
ties with friends, family, neighbors, and
colleagues can improve our odds of
survival by 50 percent.” It argues that
low social interaction is as harmful as
alcoholism and smoking so, if health
issues were a concern, providing spaces
that encourage social interaction would
actually help residents.
Garden Spot Village and the Lifestyle Approach
For Garden Spot Village, a nonprofit CCRC
in New Holland, Penn., lifestyle has always
been a key component of planning. Today the
community is 99.8% occupied with an age range
starting with residents in their late-50s and
spanning four generations.
At the heart of Garden Spot Village is variety;
the community has 569 houses and apartments
and is in the process of adding 50 more.
Apartments range from studios with kitchens
and laundry to three-bedroom units that are
up to 2,000 square feet. Additionally, Garden
Spot offers clustered cottages that marketing
director Scott Miller says are the most popular
offering at the moment.
“Lifestyle is the basis of all of our messaging,”
Miller says. “The value proposition is that we
provide abundant opportunities for people to
live with purpose in the community.”
The community has 40 clubs, from an art guild
to a train room, quilters, crafters, and even a
metalworking club launched by residents.
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 7
Providers should evaluate amenities and unit features based on operational and
maintenance costs, space needs, lifestyle alignment, ability to encourage social
engagement, and location. They might include:
• A social gathering space in a common area of the community such as a pub or bar
• An aerobics or activity room with frosted glass in the front of the community
• A focus on the outdoors including outdoor spaces with fireplaces
• Underground parking
• Apartments with views and many windows
• Classrooms and lifelong learning rooms where special interest groups can gather
In addition to developing specific building spaces to entice consumers, providers can also
look to partner with concierge service providers who make carrying out everyday tasks
easier. Coordinating access concierge laundry and dry cleaning services, Uber and Lyft
ridesharing services to and from social events, concierge dog walking or boarding services,
and meal delivery services make sense if they align with the lifestyle promises of the
community.
It’s important to offer a variety of amenities and services, but not so many that the lifestyle
component becomes too costly.
“People can receive nearly anything offered in a retirement community in their own home:
meal delivery, healthcare services, housekeeping, and medication delivery to name a few,”
Wollschlager says. “The one thing they can’t get is the social companionship. Providers
can generate a unique lifestyle, but they will need to learn how to market that to future
residents.”
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 8
Marketing to the active adult residentDeveloping an entirely new message
Because active adult living is based on lifestyle and not health care, organizations that
offer it must develop a new marketing strategy to appeal to this new audience. Largely,
this audience comprises baby boomers, who today are 56 to 76 years of age and have
a completely different outlook on retirement than their counterparts from previous
generations.
“Previous generations saw retirement as a reward for a lifetime of hard work,” says Scott
Miller, director of marketing for Garden Spot Village in New Holland, Penn. “Baby boomers
say, ‘I am still changing the world.’” As a result, the community focuses its messaging on
lifestyle rather than age.
Using digital media with imagery that is
authentic and taken from the community and
actual residents is key.
Using real photography, rather than stock
images, is a place to start, says Hoppy Sell,
president of Gastonia, N.C.-based Spectrum
Consultants.
“Any of us can buy photography or use models
to portray younger adults,” Sell says. “But it’s
not about using stock images. It’s about using
your own residents and showing them doing
[things in the community].”
Marketing also becomes critically important because those who are moving into active
adult are doing so based on wants, rather than needs. The decision is consumer-driven,
rather than health-care-driven, and this requires a mindset shift for marketers, across
various channels including social media.
Scott Miller
Director of MarketingGarden Spot Village
“ Previous generations saw retirement as a reward for a lifetime of hard work. Baby boomers say, ‘I am still changing the world.’” As a result, the community focuses its messaging on lifestyle rather than age.”
ACTIVE ADULT: MOVING UPSTREAM TO ATTRACT THE YOUNGER CONSUMER 9
“The most important thing is the materials and
marketing collateral—regardless of print, video,
social media, email, TV, billboards, or whatever
it may be—authentically represents the culture
and lifestyle people are stepping into,” Miller
says.
Expanding into active adult: doing the research
A move into active adult living may seem like
a departure from traditional senior housing
models, and not all operators will make the shift.
However, competition and consumer demand
may require it. Beginning to think about this
expansion today will allow providers to create
offerings for a younger demographic that seeks
a housing option that offers a social, active
lifestyle in a variety of home styles. Appealing
to this active adult market now can not only
help operators expand their target resident
demographic, but can be the difference between
remaining competitive in the future and being
left behind.
Property Type Monthly Rent Annual Rent% Spent on
Housing
Annual
ExpenseAnnual Income Shortfall
Median
Retirement
Savings3
Years Until
Assets
Depleted
Active Adult1 $1,603 $19,000 60% $32,000 $30,000 $2,000 $105,000 52.5
Market Rate
IL2$3,257 $39,000 60% $65,000 $30,000 $35,000 $105,000 3
Active adult and the middle market crisis
The “middle market” for senior housing
is a rising concern among consumers and
operators alike. The vast majority of pre-
retirees cannot afford today’s average
assisted living costs, and there have been
many ideas proposed with respect to
meeting the needs of the massive baby
boomer population. (Read more about
this challenge in Plante Moran Living
Forward’s white paper, Solving the Senior
Housing Middle-Market Crisis.)
Under the active adult housing model
providers can help aging middle-income
seniors age in the right place and extend
their savings. As evidenced by the chart
below, the units priced as active adult
would allow the average individual to live
in the dwelling without depleting all of
their assets. (See chart)
1 Monthly rents are averages of starting rents at over 30 active adult communities nationwide2 Per NIC MAP Data Service — Market Rate Indepentent Living rents are based on IL rents in the NIC Market Performance Report for 1Q20193 The Urban Institute, DYNASIM3
Jamie Timoteo, Senior Vice President
Phone: 312.344.2449 | Email: [email protected]
Miranda Eliason, Senior Consultant
Phone: 312.980.3318 | Email: [email protected]
Plante Moran Living ForwardTM provides fully integrated
strategic, financial, operational, and development advisory
services by a single team that has spent decades finding
solutions that increase the quality and places of care for seniors.
Plante Moran Living Forward
10 S. Riverside Plaza, 9th Floor, Chicago, IL 60606
pmlivingforward.com | @pmlivingforward
Dana Wollschlager, Partner and Practice Leader
Phone: 847.628.8903 | Email: [email protected]