We are fond of bringing up the fact that far too many people have put the CCRC (LPC) market prematurely in its grave. It especially happens when there is a recession, like 10 years ago, and now. We are hearing rumblings again even as suburban housing prices are rising as city dwellers are heading for the COVID-free hills.
We are not even four full months into this pandemic, and a much shorter time since the economy has officially been declared to be in a recession, so there are still far too many unknowns as to what may happen. But CCRCs entered this recession in probably the strongest financial position they have been in since 2007. As a result, they may weather the storm better than the pessimists think.
That is certainly what management at Mather is hoping. The Illinois-based not-for-profit CCRC provider started site work in May on what may be its most ambitious project yet. The first step was demolishing an existing structure in Tysons, Virginia, and then completing the site work and start building. The project is projected to cost at least $450 million, making it one of the most expensive new developments in years. As of now, they are looking to bank financing for the construction and not tax-exempt bond financing.
Phase 1 was 50% presold last November, and it is now 65% sold. They expect this phase to open in 2023. They are drawing residents from McLean, Arlington, Falls Church and Vienna, Virginia, as well as Washington, D.C. and Maryland. Phase 1 will have 186 independent living units. The unit sizes will range from 850 square feet to 3,000 square feet, with an average of about 1,500 square feet.
The 90% refundable entrance fees start at $650,000 and rise all the way to $4 million. The refund is guaranteed within a maximum of 180 days. Monthly service fees start at $5,000 for a two-bedroom unit, and about $3,600 for a one-bedroom unit. Let’s just say, this is not for the “forgotten middle.”
Now that construction has started, they are taking “priority reservations” for phase 2 of The Mather. Phase 2 will house 114 IL units in a separate building, plus 16 assisted living units, 20 memory care units and 42 skilled nursing units. The ironic thing is that with the phase 1 not opening until 2023, their timing could be perfect. Presumably, the COVID pandemic will have run its course, the economy will be stronger and there may not be many new developments breaking ground in the near future to compete with it. That bodes well for the future of this new community.
But a lot can happen in three years. Afterall, six months ago who was really thinking that a pandemic could alter the way we work, shop, eat, breathe and travel? Not many. However, the CCRC market will survive yet again.
