COVER STORY, SEPTEMBER 2005

SENIOR CLASS
Senior housing developers are offering more options to residents in the Midwest.
Luci Cason

While areas like Florida and Arizona have traditionally been known as retirement hotspots, many seniors are choosing to stay in retirement communities near their Midwest homes, where an increasingly wider variety of senior housing choices are now available to them.

Nationwide, the senior housing industry has recently seen increased occupancy and revenues and the Midwest is no exception, especially Illinois. According to Marcus and Millichap’s most recent senior housing market report, the state’s senior living facilities have the highest occupancy levels in the nation and it, along with California, leads the nation in senior housing construction starts.

Erickson Retirement Communities is an east coast company that recently made its foray into the Midwest. The Baltimore-based company has 17 senior housing properties, including two in Michigan  — Fox Run in Novi and Henry Ford Village in Dearborn — and two in the Chicago area — Sedgebrook, which opened this June in Lincolnshire, Illinois, and Monarch Landing in Naperville.

“You take a look at Chicago and realize that there are a lot of housing options, but there are not enough that really bring everything together to give people the benefits of this great active lifestyle and the peace of mind of having healthcare and the focus on wellness all under one roof,” says Tom Neubauer, Erickson’s senior vice president of sales.

Senior housing owners and developers now offer a wider array of choices than ever in the range of care that they provide — whether those retirees choose to reside in independent living or assisted living facilities.

Lutheran Senior Services (LSS), which owns and manages properties within a 150-mile radius of its St. Louis headquarters, operates most of its facilities on a continuum of care, with each community ranging from unassisted senior living to assisted living to skilled nursing and even dementia care.

“Typically, what LSS has done is have all the different levels of care on one campus,” says Lutheran’s director of public relations Marsha Hemple. “So, if someone wants to move to one of our communities, they’ll be able to move through our whole system as their needs change.”

Lutheran Senior Services recently acquired Heisinger Bluffs in Jefferson City, Missouri.

Lutheran’s Meramec Bluffs in St. Louis features this continuum of care, with 196 units for senior living and 58 apartments dedicated to licensed assisted living, and was recently expanded to include a second phase.

Two of its recent acquisitions — Lenoir Woods in Columbia, Missouri, and Heisinger Bluffs in Jefferson City, Missouri, also both feature this continuum.

Hemple says that facilities having this continuum are rarer in more suburban and rural areas such as Columbia and Jefferson City, but are becoming more common in larger urban areas.

Along with choices in the level of care that their communities provide, seniors also are demanding more choice in the pricing levels of their housing options.

Des Plaines, Illinois-based Pathway Senior Living currently is developing Galewood, a new affordable assisted living senior housing project on West Grande Avenue in Chicago.

Pathway’s senior vice president Robert Helle notes that there is still room to grow in the affordable senior housing area.

“We have not seen overbuilding in affordable housing because your sources of financing are so limited, it tends to put a thumb on how much can be built,” he says.

Chicago-based Senior Lifestyle Corporation is hoping to find room to grow in the mid-level senior housing market.

As a senior housing developer, owner and operator, the 20-year-old company got its start producing high-end retirement living communities — what Robert Gawronski, Senior Lifestyle Corporation vice president of development and acquisition, describes as a “cruise ship on land.” About 12 years ago, Senior Lifestyle began developing affordable housing projects with a concept called Senior Suites. So far, it has developed 15 of these communities targeting seniors earning between $15,000 and $35,000 a year in Chicago.

Senior Lifestyle Corporation has begun construction of its second community at Autumn Green at Midway Village in Chicago.

“There was this middle market — upper middle income, hard working people who wanted or needed more services than we could provide in the government-financed properties but who could not afford or chose not to pay for the full-service, higher end properties,” he says. “It’s really intended to be the Chevrolet of full-service retirement living, where you get a really nice environment to live in with all the necessary services at a price point that’s anywhere from $600 to $700 a month less than the competition.”

He notes that while Midwest seniors have many housing options in the high-end or affordable housing markets, “it’s this middle market where a large majority of the senior population exists that still don’t have a lot of choices.”

Gawronski says that although some developers have been successful producing this mid-level senior housing in rural or suburban areas, it’s more of a difficult task in an urban setting like Chicago.

Senior Lifestyle just began construction on its second Autumn Green community in July on the northwest side of Chicago and it is scheduled to open next summer. Gawronski says the company hopes to grow its Autumn Green line in the same way that it expanded its affordable Senior Suites line.

“It took us a few years operationally and on the financing side to actually make it work,” he says of the company’s new development line. “As developments like Autumn Green become more and more successful, you’re going to see more people trying to emulate what we’re doing now. The market is just going to demand that people start figuring out how to address that segment.”

Price and level of care aren’t the only considerations for seniors choosing to move into retirement communities. Programs that provide for social, physical and intellectual stimulation are also important.

Typically, seniors in Midwest retirement communities are older than those in Sunbelt areas like Florida, but with more and more seniors staying active, fitness centers are now a must at many mid-level to higher-end retirement communities.

“Older adults are working at staying fit and they like the idea of having a swimming pool and fitness equipment,” says Hemple, who notes that two of Lutheran Senior Services’ communities even have competing water volleyball teams. “They’re active and they like choices,” she says.

“The customer has obviously evolved during the past 20 years. There’s a much greater focus on wellness,” Neubauer notes. “We see a lot more interest in our aquatic centers and fitness centers. It’s a much more active generation.”

Many facilities also are offering planned outings for residents who are interested in travel, now that they no longer have to worry about leaving an unattended home behind.

Senior housing owners and developers also are making an effort to provide expanded amenities in order to attract residents.

Many senior housing developments also are now offering libraries and computer labs for those seniors interested in informational pursuits.

“More and more we’re wiring the individual apartments for high-speed Internet access,” Gawronski says, a concept he notes that was basically unheard of even just 5 years ago. “In addition to the traditional library and arts and crafts rooms, we’re adding computer labs.”

More facilities are putting a premium on living and storage space. Many seniors move into retirement living communities in order to escape the stress and burden of having a home, but that doesn’t mean they want to be cramped into small studio apartments.

“We’re seeing that residents and residents’ families are asking for larger units,” Helle says. “There’s also an interest in larger kitchens. Even though residents don’t have to cook, they want to know that they have the space to cook if they want to.”

Seniors not only want more space, but they want that space to look nice as well.

“You’ve got to upgrade to appeal to this generation. They expect modern amenities,” Neubauer says. In this vein, Erickson continually renovates and updates its properties to keep them looking like new. According to Neubauer, the company’s oldest property looks as modern as the latest property in terms of furnishings and accoutrements.

It’s clear that with seniors staying active longer and demanding more space and recreational amenities, today’s senior housing developers will have to stay creative in order to keep attracting residents.

“What has been built in the past hasn’t necessarily met the needs of people in the retirement generation,” Neubauer says. “They need more than just a place that cuts the grass and shovels the snow.”

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