Editor’s Note: David Collins and two partners in 1980 founded ARV Assisted Living, which developed and operated more than 100 senior living communities throughout the U.S. The publicly traded company was acquired by an affiliate of Lazard Freres and is known today as Atria Senior Living. He has worked in Europe developing Spain’s first residential community designed exclusively for seniors. The London Daily Telegraph called Sensara “the best retirement development in Europe.” Collins’ firm, Newport Beach-based Active Living International provides advisory services on the business of senior living for clients worldwide.
Dynamic growth in the population of seniors in Orange County is attracting major developers of residential communities for senior living. The county’s nearly 500,000 adults over the age of 65 account for 15.7% of the population according to the U.S. Census.
By David Collins
A report from the Office on Aging, Orange County projects an increase of 10% over the next 20 years. Age groups under 65, however, are expected to decrease in the county and nationally older people are projected to outnumber children for the first time in U.S. history.
Since its incorporation in 1999, Leisure World, now known as Laguna Woods, has experienced aging in place and today more than 80% of its population is over the age of 65. With the rising demand for health and wellness communities in Orange County, private and publicly traded companies are finding new opportunities.
Real estate investment trusts (REITs) are investing in senior living communities while commercial banks are providing debt. Specialty firms like Harrison Street of Chicago are among the leading funders of equity along with Wall Street investors include KKR, Bain and Apollo.
Investors who like multifamily buildings are now also looking at the senior housing investment field. These investments tend to provide a hedge against economic downturns.
In some instances, such investments can provide benefits like tax credits and gains from increasing rent revenues relative to care and services. Depending on community type, cap rates vary, typically running at around 6% to 8% with average net operating incomes ranging greatly from 17% for older, middle market Class B products to 42% for newer Class A products. When compared to other markets, senior housing did well during the pandemic.
Change From ‘Old Folks’ Homes’
Orange County operators offer a standard of quality and service to meet the demands of not just the resident but the resident’s family. Choosing a community for a loved one is often a family decision. A fundamental characteristic of senior living is not only the quality of care but the proximity to residents’ families.
The availability of high-quality senior living communities in Orange County is impacting the concept of seniors aging at home. Memories of visiting an “old folks’ home” fall away quickly during a tour of today’s lifestyle-enhanced communities like Atria near Hoag Hospital in Newport Beach, or Vivante Newport Mesa in Costa Mesa. The Nexus Companies will open Vivante Newport Center near Fashion Island before year-end. Fees start at $15,000 a month that includes dining, housekeeping, chauffeured transportation, access to all of Vivante’s amenities, an extensive entertainment and activities schedule, and a 24-hour nurse on-site.
The key difference between a guest in a five-star hotel and a resident in a senior living community is the age and the lifestyle of the resident with four to five years as the average length of stay.
Cory Alder, president of Nexus Companies, the developer of Vivante Newport Mesa and the soon-to-open Vivante Newport Center, shared that tours of the ultra-luxurious 99-unit community have begun. The site had formerly been home to the Orange County Museum of Art.
This luxury senior living community will appeal to future residents for its location, a short walk to Fashion Island, its focus on wellness and health care, extraordinary cuisine, curated programs, fitness, and a concierge with staff available around the clock. Services will include housekeeping, transportation, entertainment, game rooms, and perhaps most popular of all, happy hours.
Throughout Orange County, specialists like the Ensign Group (Nasdaq: ENSG) operate nursing and post-acute care communities. Silverado of Irvine is a pioneer in memory care and is recognized internationally as a leader in dementia care. The company operates communities in the cities of San Juan Capistrano, Costa Mesa, Tustin and Brea.
The average age in an assisted living or memory care community in Orange County is in the mid to high 80s with all-inclusive monthly fees beginning around $4,000 for assisted living and $7,000 for memory care.
Another new senior living community is in the development process on Bristol Street at Jamboree Road at the site of the former Kitayama restaurant. Owned by Clearwater Living it will offer independent, assisted living, and memory care.
As the economy stabilizes and grows operators are seeking to find and retain the specialized labor that thrives on relationships and inclusivity. Staff recruitment is critically important with continuous hospitality training as a hallmark of the business.
Seniors historically wait too long to move into a residence; however that resistance is being mitigated by the five-star qualities found in communities such as Vivante, Atria, and Reata Glen. A resident of Reata Glen, a continuing care retirement community in Rancho Mission Viejo, is fond of telling visitors, “I haven’t had this much fun since college.”
Developers continue to compete for land in the face of greater construction costs and inflationary pressures according to Alder. He adds that “the pressure on cities to build residential units to meet state housing requirements means senior housing may not be the top priority.”
Aging in place, socializing with friends, and having nutritionally balanced meals prepared by five-star chefs have helped to bring senior living to thousands in Orange County. Although challenges often accompany aging, the adaptations by today’s developers and operators are making a difference. Seniors now have the option of being able to choose how to get the most out of life while advancing in age. Independent living and assisted living, now widely available in Orange County, look more like the hospitality business they have become.
These independent seniors and their families want the support and structure that relates to care without the atmosphere of a nursing home. With the average age of 87 in senior living communities, it is no longer surprising that aging in place in a community complements how residents view themselves which may be 10 or 15 years younger than reality.