Capital Investment Remains Strong in the Active Adult Space

Some developers and investors are unsure about committing to new senior living developments amid rising construction costs and interest rates, while others remain bullish on building new communities figuring that demand will be outpacing supply for the foreseeable future. I have even heard from some clients that they really push to get new developments going in this environment when other potential new projects may be holding off which gives them a leg up in a given market. 

One segment that continues to gain steam is active adult according to a recent article in Seniors Housing Business’ April Edition. Active adult communities target those 55 years old and older that are ready to rid themselves of all things associated with home ownership, but are young and healthy enough that they don’t require assistance with daily living activities. These communities are not as labor- or service-based as an assisted living community because they don’t offer the kind of health services required, nor the meal services of an independent living complex. Therefore, they have not been impacted as much by the rising costs of staffing; nor have their occupancy rates been affected by Covid-19 to the degree assisted living has.

According to France Media, “The current 55+ cohort is the largest and fastest growing segment in today’s renter landscape and will remain so for the next two decades.” That is amazing!

Needless to say, it is an exciting time in this space with cap rates being very similar to conventional multi-family properties and plenty of capital looking to invest in it. 

Don Diedrick

Director of Business Development

The Douglas Company

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