‘goofy’ But Worth It: Why Maplewood, Felician Services, Senior Lifestyle Adapt Older Buildings

Architects and developers are finding ways to get creative with the practice of adaptive reuse, where old buildings are converted into new senior housing offerings.

While the practice isn’t for the faint of heart due to the costs and challenges with bringing buildings up to code, it comes with unique opportunities and marketing possibilities once the projects are completed.

Among those working in this area of development are Maplewood Senior Living, Felician Services and Senior Lifestyle.Recent projects include Maplewood’s Inspir Embassy Row, which came together from a former hotel in Washington, D.C.; the conversion of a convent in Livonia, Michigan into affordable senior housing; and the conversion of a 100-year-old monastery in northwestern Chicago into Senior Suites of Norwood Park.

According to James Adams, senior vice president of real estate development and acquisitions at Life Care Services, about a quarter of new senior living development acquisitions in New York City stemmed from redevelopment or repurposing office or residential properties.

“Building straight from the ground up is simple,” Chet Jackson, managing director of real estate ministry development for Felician Services said. “But when you have adaptive reuse, you have to use what’s there and figure out how to incorporate what’s current into that project.”

With the increasing demand coming to senior housing over the next decade in the form of the baby boomers, adaptive reuse could help senior living companies continue to grow as lending and labor for new development remains tough to get.

“It’s one of the levers that we have as developers to bring supply to market,” Adams said.

All available levers are likely going to be needed in the coming years as well, as the industry will need to find a way to develop communities at 3.5 times the current rate in order to meet the number of seniors entering the industry by 2030.

Unique challenges, unique opportunities

It’s no secret that designing senior living communities from an adaptive reuse mindset has its fair share of challenges. Among the big reasons why is that architects and developers must fit within a pre-built shell, with hallways, rooms and other spaces that may not work well for senior living.

Office buildings in particular have difficulties in bringing in enough light and ventilation, along with having the density needed to convert them to apartment units, according to Bob Gawronski, vice president of development for Chicago, Illinois-based Senior Lifestyle. Hotels are also challenging to convert given the fact that rooms are not always amenable to what older adults want.

“You have to be prepared with a pretty hefty contingency compared to the ground-up,” Gawronski said.

Felician Services is grappling with renovating a space with concrete floors and walls at its Michigan convent renovation project. In order to wire in HVAC and electrical, split systems have to be incorporated into the structure, according to Jackson.

However, these kinds of projects also have ways of lending to the redesign themselves with existing structures, such as built-in shelves within the living quarters in the convent’s case.

“We’ve got great finishes, and so that becomes part of the marketing for the unit itself,” Jackson said.

Determining the number of units in a building as a starting point varies by developer. Maplewood has focused on large conversions ranging from 174 to 215 units, all with a high price point of nearly $1.2 million per unit. But the operator will pare down future projects in terms of unit count, Adams said. Felician Services, focuses on smaller buildings ranging from 60 to 80 units, Jackson said.

If an adaptive reuse project is too large, it becomes difficult to sell in a timely manner, Gawronski said.

“Any larger than [200 units] … the lease up and time period really takes its toll,” Gawronski said. “On a long term basis, anything larger than that, you’re on that treadmill of trying to just back fill apartments as they turn.”

Despite these kinds of challenges, converted buildings have their fair share of unique opportunities, particularly from a marketing standpoint. Inspir Embassy Row converted The Fairfax at Embassy Row, an old grand dame hotel with “ornate cornices, beautiful masonry work and things that nobody would justify building today,” into the current senior living community it is today. That can help add a unique and hard-to-recreate quality to a community, Adams said. And older grand features such as what’s included at the hotel can strike familiar chords for some residents.

“For an 85 year old resident that you’re plucking from the life they know and asking them to spend the rest of their days in a new environment, the idea of giving them something familiar is a pretty extraordinary value proposition,” he said.

Adaptive reuse: ‘goofy … but well worth it’

Converting older, non-resedential buildings into senior living communities can be an expensive and awkward process, though not necessarily more expensive than building from the ground up depending on the details. In order to maximize the returns, some companies seek state tax credits.

Senior Lifestyle opted into a tax program covering $1.6 million for preservation through the National Parks Service for its Senior Suites of Norwood Park project, Gawronski said.

Though there are ways to get adaptive reuse projects done on budget, they have more hoops to jump through. Senior Lifestyle worked with the Illinois state historic preservation office, which prioritized the preservation of cornices and the fenestration of the building, which don’t “make much sense to a layperson,” Gawronski said.

“There are goofy little things like that, but well worth it,” he said. The hard cost for the monastery was probably close to $1 million dollars … but we qualified for the $1.6 million of tax credits and capitalized that into $1.5 million. It was a win-win for everybody,” he said.

For operators looking to get more involved in adaptive reuse development, Jackson recommended choosing contractors based on their experience in projects using tax credits, along with finding those who have worked on similar project types. The operator’s project in Michigan was smoother because the company’s chosen contractor had done “a lot of adaptive reuses,” including a hospital and another senior living community.

Adams said when Maplewood is looking into contractors, focusing on the physical environment for the reuse is critical, particularly when trying to find the appropriate architects.

“There are a lot of big contractors that have great experience with historic renovations, but [it’s a] critical aspect of the success of the project,” he said.

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