As the recovery from the pandemic seems to be slowing (or stabilizing), we have always said that the more upscale communities would have a better go of it than the more middle market ones. Location seems to be more important than age, as well.
We toured a large community in Stamford, Connecticut that opened last year, and another smaller one in Darien, Connecticut that opened more than 25 years ago. The former is operated by Epoch Senior Living and the latter by Atria Senior Living. We actually went to the Atria property for the open house 25 years ago when CareMatrix (Abe Gosman) built it. Both communities were very nice and doing very well but could not have been more different, which we suppose has to do with their age. Newer properties tend to have larger units and much more common space, and this was certainly true here. It was fascinating to hear that the chef at the Atria community has been there for 25 years – how unusual. But think about it, unlike a restaurant, the senior living chef can be home before 8 pm.
We bring this up because in case you had not seen it, last Friday’s lead story in the Mansion section of The Wall Street Journal featured upscale retirement communities and their dining attributes. One of the properties featured was Coterie Senior Living, a joint venture between Atria and The Related Companies, located in the Hudson Yards area of Manhattan. With 126 units, rents range from $11,100 for a studio to $27,000 for a two-bedroom unit, but the story was all about dining.
Also featured was Sunrise at East 56th (which finally opened), a 17-story assisted living and memory care community in midtown Manhattan where rents range from $15,000 to $35,000 a month. The joint venture includes Sunrise Senior Living, Hines and Welltower and boasts five-star dining. For a more modest experience, the story also featured Watermark Retirement Communities’ Hacienda at Georgetown in Texas where a two-bedroom goes for just $6,000 a month. But the food was just as good apparently.
In the right locations, these luxury communities will almost always do well, assuming they are well managed. Even in times like today, coming out of the pandemic, they will hold their values, and demand from the wealthy contingent should hold. The lease-up can be slow, but once stabilized they are solid investments. But it is the lesser-quality communities, especially the older ones, that we worry about. If rents are at $20,000 a month, you have a lot of wiggle room to deal with inflation and rising staff salaries. But when rents are $4,000 a month, your flexibility to deal with today’s economic realities declines.
Getting back to the lengthy Wall Street Journal story, it does bring to the forefront, in our post-pandemic world, what service, exactly, senior living providers will be marketing the most, and how different it will be based on the price point. What is the most important aspect? Food, wellness, health care, people with the same interests? Some would argue all of the above. It’s going to be an interesting rest of the decade.
