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New senior housing projects demand big money for luxury living

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Developers are betting that as baby boomers age, demand will skyrocket for ultra-luxury senior housing projects with rents that can exceed $25,000 a month.

A company of promoter Related Cos. and Atria Senior Living, one of the largest senior housing operators in the United States, earlier this month opened the first of its Coterie line of senior housing projects in the Cathedral Hill neighborhood of San Francisco. Facilities at the 208-unit project include five restaurants, a rooftop terrace, an outdoor pool, and a garden with bocce courts.

Monthly rents range from $8,000 to over $25,000 per month, including meals, housekeeping, concierge services, and cultural programming. Like many new luxury senior housing projects, Coterie Cathedral Hill can support seniors whose needs range from no special care to assisted living and memory care.

Other developers who have targeted the luxury senior housing niche include private equity firm Kayne Anderson Real Estate, which has opened 13 properties with around 2,800 units and has one under development, a revival structure 1855 cottage refitted in New Orleans. Medium units in the company’s Brooklyn project rent for $13,000 a month and include meals and housekeeping.

Developers are focusing on developing high-end seniors’ housing as some baby boomers – people born between 1946 and 1964 – are approaching the age at which people typically move into seniors’ housing, participants said. of the senior housing industry.

“Between 2005 and 2018, the over-80 population grew by 200,000 or fewer per year,” said Atria chief executive John Moore. “Last year it was up 325,000. This year probably 450,000. Next year more than 600,000.

Most private senior living operators target the middle market and charge average rents of around $5,500 per month for assisted living, including food, housekeeping, and activities. In recent years, developers and operators have begun to focus on more high-end niches, similar to how hosting companies have created new high-end brands.

“You’re starting to see segmentation in the industry,” said Beth Mace, chief economist at the National Investment Center for Seniors Housing & Care, an industry organization.

A rendering of a residence at Coterie Cathedral Hill.


Photo:

Related and Atria Senior Living

One of the pioneers in the luxury sector was Vi Living, a company controlled by the Pritzker family of Chicago, which is also a major shareholder in Hyatt Hotels. Corp.

, according to Randy Richardson, president of Vi. Founded in 1987, Vi Living plans to launch a new rental brand with a 320-unit development in Scottsdale, Ariz., Mr. Richardson said.

Groundbreaking is scheduled for early next year, Mr Richardson said. “Over the next five to six years, we could have 10 of these communities open or under development,” he said.

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Senior housing has been one of the types of commercial properties hardest hit by the pandemic. Many people did not want to move into institutions because they feared becoming infected and being cut off from their families by health protocols.

Conditions have steadily improved since vaccinations became widespread. The average senior housing occupancy rate in the 31 primary markets was 81% in the fourth quarter of 2021, up from a pandemic low of 78.7%, but still below the pre-pandemic rate of 87.6% in the fourth quarter of 2019, Ms Mace said.

Many of the new senior-luxury developments are in city centers, which have increased rents because land prices and construction spending are high. Related-Atria also plans to open a 120-unit facility under the Coterie brand later this year in the sprawling Related Hudson Yards development on Manhattan’s West Side.

“Older people who are city dwellers want to stay city dwellers,” said Atria’s Mr. Moore.

Write to Peter Grant at [email protected]

Corrections & Amplifications
Kayne Anderson Real Estate was misidentified as Kayne Anderson Real Estate Advisors in a previous version of this article. (Corrected March 22)

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