Sidenote: With 18% of Florida's population, about 2.75 million people, aged 65 and older, the "Sunshine State" has the highest percentage of older Americans in the country. Florida is the strongest market for active adult retirement communities (AARCs) with 38% of the U.S. total AARCs. Arizona, with 21% of the country's AARCs, has the next greatest number followed by California with 16%.

AARCs appeal to and are developed with ‘active’ older persons in mind. Tennis courts, golf courses and other recreational/athletic amenities are high on the list of desirable features in active adult communities. However, industry experts warn not to focus or rely on a particular amenity, such as a golf course, to be the primary attraction. Many residents of golf course retirement communities never set foot on the course. The challenge, according to Jack LaCroix, Vice President of Sales and Marketing at Herons Glen in Fort Myers, Florida, is to offer a variety of products in home types and amenities to residents. Having enough amenities, as opposed to the perfect amenity secures a variety of interests.

Semi-Independent Elderly
Congregate Care –– Among various alternatives of senior housing facilities in the U.S., congregate care complexes are most like independent living but usually include group-related amenities such as a clubhouse, community dining room, and/or a swimming pool. Congregate care operators usually create a landlord/tenant relationship with residents in which monthly rental is charged. Staff members of congregate care facilities provide support services like housekeeping, linen service, transportation and organizing social activities.

Life care centers (LCC), continuing life care centers (CLCC) and continuing care retirement communities (CCRC) –– Continuing care residences provide the opportunity for, as one might imagine, life care. Initially, residents might buy a single unit or, depending on the development, a small home/cabin to live independently until a physical or mental impairment necessitates greater assistance. On-site assisted living and nursing home facilities offer graduated levels of care based on the level of need. (However, payment plans differ per institution and, depending on the nature of the contract, residents may find themselves in a financial quagmire if an unexpected accident or illness requires extended care.)

Amanda Finnegan, Marketing Director at the Continuing Care Accreditation Commission, the 1980s were a challenging time for CCRCs. “As with any new thing, there is going to be some bad press in the initial stages,” commented Ms. Finnegan. “Many people see continuing care as the wave of the future,” stated Finnegan. About 20% of continuing care facilities are accredited (300 organizations in 29 states and Washington, D.C.) Accreditation requirements of the Continuing Care Accreditation Commission include a one-year process of self-assessment, quality and integrity standards achievement, reports by site evaluators, and a detailed financial review

Most life care centers charge an entrance fee that guarantees housing for life, as well as monthly payments to cover special services such as housekeeping or custodial care. This type of facility usually offers several different contract variations to their clientele.

The U.S. market potential is great for continuing care or congregate care facilities. Jack McClellan, Executive Director of Bay Village of Sarasota, Inc., pointed out that the CCRC market is ready to grow considering that “…there are only about 1,200 to 1,300 CCRCs” in the U.S. Assisted living, as well as nursing homes, target less-able seniors in their mid-eighties while continuing care tends to attract a younger (about 75) and more physically fit crowd. The market for seniors in these categories is about 15.6 million

Dependent Elderly
Assisted Living –– Often regarded as a midway step between semi-independent living and nursing homes, assisted living residents have reached a stage of life when they need a degree of assistance, but do not yet require nursing home care. Most assisted-living developments feature private or semi-private apartments that provide accessibility to assistance and security 24-hours a day. Common amenities include housekeeping services, meals, medication assistance, laundry, and regular check-ins. Other features may include transportation to and from medical and other appointments, social and recreational activities, and wellness programs.

Almost 40% of assisted living space is located in California, Florida and Pennsylvania. About 800,000 Americans over the age of 65 reside in assisted living facilities. Generally, the most prevalent requirements among residents at assisted living facilities (ALF) relate to bathing and medication. Statistics show that the average assisted living resident is an 84-year-old woman requiring help with two to four activities of daily living, which is considered to be low to moderate dependence. Most ALFs are 100% rental facilities administered by for-profit, long term care operators.

Nursing Homes –– Nursing homes usually are built as “stand alone” facilities that can match hospital care; however, they are also found within hospitals or retirement communities. Rehabilitation and therapy in forward-thinking nursing home have allowed residents more freedom and even the ability to leave the nursing home environment. It is estimated that approximately 30% of nursing home residents do not require the level of care offered by nursing homes and would have their needs accommodated sufficiently in another setting such as assisted living.

Marketing to Residents and Investors
Posh locations and amenities, such as waterfront property, golf courses, and other prime real estate factors are touted to potential residents as well as other major sources of financial support. Ingenuity in marketing is an asset in all industries. Setting trends, market and demographic research are all part of maintaining a successful facility or community. One example of a relatively recent trend is the resurgence in seniors’ interest and opportunities in continuing education.

Jack McClellan, Executive Director of Bay Village of Sarasota, Inc. (a CCRC in Sarasota, Florida), echoed other facility owners and directors in saying that most senior housing facilities consider their target market to be located within a close proximity to the facility. “If you take a compass and draw a circle with a ten-mile radius around a facility you will have your target market within that circle…in the case of Sarasota, one-half that area is water,” McClellan remarked. It is hard to find a development that does not have something that challenges marketers whether that is the environment, proximity to sites of interest, amenities, competition and so on.

The focus on the ten-mile radius target means heavy advertising in local and regional newspapers. Some communities, such as Palm Shores Retirement Center in St. Petersburg, Florida, advertise in local movie theaters and rely on personal references. Internet web sites are an increasingly popular marketing tool that reaches a wider audience.

Asserting the importance of funding resources, Cindy Shuffield, Director of Community Relations at the Colonnades in Charlottesville, commented that, “…[senior housing salespeople] need to sell to potential investors as well as to residents.” She added that selling to investors entails market research in regard to the demographics of a community and compiling comparative data about other senior facilities in the vicinity in terms of costs, set-up, amenities and so forth. Without a competitive portfolio, investors will not accept the risk of providing financing for any market segment. Having numerous amenities such as golf courses, tennis courts, walking trails, gardens, dining facilities, shopping facilities, or recreational areas are attractions that serve as tools to appeal to residents and investors.

According to Pete Russell, President of SDR Development based in Florida, the last seven to eight years experienced aggressive development of assisted living facilities as an alternative to nursing homes. “Good news traveled fast among developers,” commented Mr. Russell. Although certain areas of the country are over saturated and may be experiencing a dip in investing and purchasing of assisted living facilities, industry experts foresee the market changing in three to four years. A glut of senior housing due to over development in certain cities including Charlotte, North Carolina; Atlanta, Georgia; Las Vegas, Nevada; Chicago, Illinois and Northern Virginia (the Washington, D.C. metropolitan area) may need recovery time to regain market viability.

Types of Projects Investors Intend to Finance in the Future

Percentages add to more than 100 because multiple selections were requested of the respondents. Source: “1998 Lender and Investor Survey,” the National Investment Conference.

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REFERENCES:

American Association of Homes and Services for the Aging. “Older Americans Choosing Continuing Care Lifestyle.” AAHSA. 2001.
Jan Diaz, Palm Shores Retirement Center: Telephone Interview on July 5, 2001.
Amanda Finnegan, Marketing Director, Continuing Care Accreditation Commission (CCRC): Telephone Interview on July 7, 2001.
Mel Gamzon. “Seniors’ Housing for the 21st Century.” Urban Land. June 1999.
“Home Sweet Home.” Metropolitan Life Insurance Company Internet Website. 1999.
Jack LaCroix, Vice President of Sales and Marketing, Herons Glen: Telephone Interview on July 5, 2001.
Pete Russell, President, SDR Development: Telephone Interview on July 16, 2001.
Cindy Shuffield, Director of Community Relations of The Colonnades; Marriott International, Inc.: Telephone Interview on June 19, 2001.
Joseph Shapiro. “Growing Old in a Good Home.” U.S. News & World Report. May 21, 2001.
Kathleen Vickery. “Cover Story: A Market of Contrasts.” Provider NCAL Online Magazine. NCAL Internet Website. November 1998.
Albert Warson. “Seniors Retire on Campus.” Urban Land. June 1999. p.83.
“What is a Nursing Home?” Nursing Home Info Internet Website. 2000.