When the 98-unit Canby Woods apartment complex opened last month, every unit was taken and the wait list was already growing. But it isn’t a tony Westside condo building and the list wasn’t full of hipsters or young professionals. Canby Woods is a senior affordable housing complex in Reseda developed by L.A. firm Thomas Safran & Associates, one of dozens of new projects aimed at the aging population. Indeed, the hottest trend in multifamily development isn’t aimed at young, recent college graduates – but rather their grandparents. “The baby boomers are aging and there’s a big need for senior properties across the spectrum from senior living to dementia care,” said Mindy Berman, managing director at brokerage Jones Lang LaSalle Inc., who specializes in health care properties. “There’s pent up demand and so new development projects make lots of sense.” That senior housing spectrum is a broad one. It ranges from age-restricted retirement communities to assisted living facilities that provide a moderate level of health care to nursing homes, which provide 24-hour-a-day medical care and will most likely be a resident’s last address. The greater Valley area is seeing the demand, mostly in the lower-care-level facilities, from simple retirement communities to assisted living. With an abundance of land available, dozens of projects are in the works as developers take advantage of more readily available capital. Thousand Oaks developer Hydam Development Corp. has developed medical office, hospital and care facilities in the past. But only with its planned 125-unit Hillcrest Project in Thousand Oaks has it made the leap into assisted living facilities. “We do health care, period, and this can fit into our model,” said project manager Mohammed Esa of the $15 million project. “It’s our first time doing assisted living, but there is such a need for these sorts of projects, we felt it could be a great use of the land.” The project will be built on nearly five acres on East Hillcrest Drive, and will have nursing and other staff available 24-hours a day. Esa said Hydam plans to contract with an outside firm to staff and manage the facility – a popular strategy with first-time assisted living builders. “We’re planning on contracting with a national company that manages these properties,” he said. “But we see the aging population needs this. The need is very much there.” Long-term investment Many of the developments are on sites that lay dormant during the recession or left partially developed when builders scaled back plans. Take the Hydam project in Thousand Oaks. More than two decades ago, the city zoned the land for single-family development, and several previous owners failed to build the homes, only getting as far as grading the land. “We see value to the community in this,” Esa said. “And obviously we see development value in it.” Consider Hydam’s $15 million estimated cost. In California, the median monthly rent of similar assisted living facilities is $3,500, according to a study conducted by New York financial firm Genworth USA. That means the 125-room project could generate more than $5 million in gross rental payments annually – enough for Hydam to quickly recoup its investment even though it will be offering nursing and staff services. Unlike nursing homes, or skilled nursing facilities, most residents of assisted living facilities are paying the rent themselves. Few are on Medicare or Medicaid, instead financing their living situation by selling their homes to move into the complexes or receiving family support. Some, like Canby Woods, are subsidized through state and local municipal dollars, and residents must fall into a low-income category to qualify for the $700 to $900 a month rentals. Those affordable rentals are basically age-restricted Section 8 housing, and the developer is not providing any health care on site. While many of the proposed developments are not skilled nursing complexes, several might include memory care wings – in which otherwise healthy residents can be locked in so as not to wander. And that can be pricey, with dementia care averaging $56,000 a year according to a new study by the Rand Corp. think tank. More senior living is on the way, say industry watchers, and may include more complex facilities that encompass multiple stages of the care spectrum. “We’re not even going to hit the peak of retirees running off into the sunset, as it were, until 2026,” said broker David Casper, a vice president in the Encino office of Colliers International. “That means this market is going to grow and expand in physical space, specialization and in sheer numbers. There’s absolute certainty in that,” he said. Rapid expansion There are scores of projects in the works across the greater Valley region, and many are clustered in the bucolic hills of Ventura County. Given its population – largely older than the San Fernando Valley – the area is in need of these properties, say local developers. One of those is Kingdom Builders LLC, which is in talks with the city of Simi Valley to secure a 51-unit senior townhome complex; One Eighty of Seattle, which owns long-term care company Leisure Care LLC, has plans to develop a 131-unit senior living community on 6.5 acres in Westlake Village. And in the largest proposal, developer 1 Moorpark LLC has proposed a sprawling 390-unit senior community at Casey and Walnut Canyon roads in Moorpark. That project would not include any nursing care, but has asked for a zoning change that would make affordable units possible. It’s not just the developers, though, as institutional investors have taken an interest in the area’s properties. Demand has driven up prices for investors who are settling for lower returns. “These properties trade at a low cap rate because the market for them is stable,” Casper said. “There’s a high demand for them, and many of these one-off developers are going to build them and will likely end up building more.” The development risks also are generally low. For example, in March, San Jose real estate investment firm DiNapoli Capital Partners LLC acquired the Meadowbrook at Agoura Hills complex, a 158-unit assisted living facility that has an acute-care dementia wing for $33 million – the highest price for a health care property in Ventura County this year. DiNapoli, which routinely acquires properties that could benefit from a renovation or redevelopment, noted that it was planning to do some work to the property, which was constructed in 2001. “With the larger properties, I think this is going to happen more often,” said Casper. “Consolidation is the name of the game and the investors see what’s going on and are going to continue to be interested.” But not everyone is excited about the boom in senior property buildings. Many of the projects have been dogged by neighbors and community groups, who say the nature of any developments from assisted living to more acute care are likely to bring additional traffic from delivery trucks and residents. Also of concern is noise, particularly from sirens for emergency responders answering calls from residents who need medical attention. Hydam, the Thousand Oaks project, has been subject to similar complaints from residents who oppose the project, but Mel Silberberg, a senior rights advocate who has previously chaired several city advisory committees on aging, says the complaints are short-sighted. “They’re saying not in my backyard, but what they aren’t realizing is that they’re going to get old too,” he said. Silberberg has been a vocal proponent of the new construction in Thousand Oaks, and said the need for the senior projects is there, despite the concerns, and that the developments aren’t going to stop because of the noise worries. Even along Hillcrest Drive, where Hydam has planned its project, another group, Thousand Oaks non-profit Many Mansions, has proposed a 60-unit affordable senior housing project. “People who live in the area want to stay in the area, even when they get to the point where they might need some help,” Silberberg said. “If done properly, assisted living properties can be great neighbors.”
Assisted Development
