Senior Renters Represent a Growing, Diverse Segment in Small Apartment Properties
Seniors are not a monolithic renter group, but rather have varying needs from early retirement to skilled care services. Small property operators will have to prepare for this generational demand as more seniors are choosing to rent.
The Changing Face of Seniors Housing
The senior renter segment today constitutes a significant and growing share of the small asset apartment demand. This is leading property owners to incorporate a slew of ‘aging in place’ amenities and improvements, including such features as walk-in showers, wheelchair ramps and wider doorways.
That being said, many of the things seniors demand from their apartments – low-maintenance living, high-end touches and access to culture – are the same things attracting Millennials to a rental lifestyle.
As covered in an Arbor and Chandan Economic’s recent webinar ‘Financing Trends for the Changing Senior Housing Landscape’, traditional rental housing will incorporate elements of independent living, while independent living will start to incorporate elements of assisted living. This is due to an increased desire to age in place — a desire that is now enabled by technology like ride-sharing services and same-day home delivery of food and goods.
Senior Rental Trends
In this deep dive, we examine with greater detail the cohort composition of older renters, and specifically those households where such renters call the financial shots.
As shown above, households with heads age 60 years and older currently comprise a total share of 19% of all small property (5 to 49 unit) households — of which the younger Baby Boomers (60-69 years) make up half of that share. Household heads in their seventies and eighties or older form less than a 5% share each.
In contrast, large properties (50+ units) have managed to attract a considerably higher share of senior households, comprising a sizable 40% of all large asset households.
The difference between small and large buildings is particularly pronounced for the 80 years and over age group, where the share of this segment in large properties is nearly four times that in small assets. One theory is that larger properties are more likely to be either a dedicated seniors housing facility or include an elevator. A garden-style property might be the ideal community structure for older renters looking to live in a traditional rental building.
Different Age Cohorts, Different Needs
At the same time, the static picture above masks an even greater transformation — one that will likely affect how small apartment buildings are managed and renovated.
As you can see below, all three senior segments in small buildings grew faster than the overall annual household growth of 3.3% over 2014-15. Of these, younger Baby Boomers grew the fastest at 6.7%, while householders in their 70s and 80s or over grew at a 3.9% annual rate.
If sustained, the above rates of growth will result in senior households increasing their shares significantly over the next decade in small apartment buildings. Small property owners and operators would be prudent to monitor this segment and the implications for property upgrades closely.