New development isn't the only way to meet an uptick in demand for independent living in the post-recession era. These days, higher occupancy rates and aging buildings are driving more providers to revamp existing properties to attract today's seniors.
Given that independent living and continuing care retirement communities (CCRCs) were predicted to lead the way in terms of occupancy moving forward, and that a 2016 outlook from statistical rating organization Fitch Ratings revealed that capital investments would likely be directed toward expansions within independent living, it should come as no surprise that providers are making moves to reposition in this area.
In fact, one provider-nonprofit ACTS Retirement-Life Communities-is in the midst of plans to refurbish more than 15,000 independent living units across 23 existing communities along the East Coast in response to the asset class' post-recession turnaround, says Jeremy Philo, a partner with Kramer+Marks Architects, the architecture firm responsible for the project. ACTS is in fact tackling a $300 million, three-year project to upgrade and reposition all its CCRCs.
"They took that opportunity to reposition, to make themselves more attractive in the marketplace," Philo tells Senior Housing News.
ACTS recently began its initiative to upgrade its existing stock of independent living, and it's been a constant rollout since, Philo says. The firm has completed about one-third of the project, he says, with approximately 300 units slated for repositioning each year, a number which could grow anywhere from 500 to 600 units as production escalates over the next five years or so.
While overall demand for independent living may be on the rise, the way that the ACTS units are being repositioned also speaks to the kind of accommodations that seniors now desire. It's not all about increasing IL capacity; in fact, ACTS determined that its independent living in some places was overbuilt, CEO J. Mark Vanderbeck told SHN in a recent interview. But the provider's repositioning efforts were driven primarily by an evaluation of its independent living components, he said.
The logistics vary depending on the specific community, Philo says, as some of the older buildings aren't conducive to structural changes. Mostly, he says it entails taking two one-bedroom apartments and combining them to make a larger unit. Otherwise, it's generally opening up floor plans, getting rid of balconies in colder areas or making smaller versions of great rooms.
Revamped Units, Full Occupancy
ACTS is not alone in rebooting its independent living offerings.
Recently, Mather LifeWays carried out a multimillion dollar renovation of Mather Place of Wilmette, an independent living community in Wilmette, Illinois, with updates to its existing 128 apartments, construction of 51 new units slated to open in July and additions to amenities, including an expanded fitness center, a cinema and enhanced multipurpose spaces.
The move was driven in part because of outdated finishes and features throughout the 25-year-old community and the desire to increase value, but also because of Mather LifeWays' plans to incorporate more units.
"It wasn't logical to do one without the other," said Gale Morgan, Mather LifeWays' vice president of sales.
The refurbishment and construction has resulted in 100% occupancy, whereas it had been about one-third less at the height of the Great Recession. There also is a lengthy waiting list for both the new product and the renovated portion she said.
SHN visited Mather Place of Wilmette in December, when the project was approximately 90% complete. The transformation of the first floor, for example, allowed for more natural light and an open floor plan. The updated fitness center boasts hydraulic weight machines and extra equipment, as well as a group exercise studio with air-suspended floors and plans for an indoor pool, while an enhanced art studio offers an array of crafting opportunities and an on-site art therapist.
Going through the process of repositioning independent living can of course present logistical headaches, Philo says, but there is a need to create a better product and offer more services. And with the high cost of new construction, many providers don't have much other option aside from sticking with existing assets.
"It's something that as a firm, we're starting to market," Philo says. "For providers, it's a safer gamble."