Nic Details State Of Active Adult In 2024 As Product Type ‘continues To Evolve’

Senior living operators making moves in the active adult space must drive lease-up of new communities through lifestyle engagement with younger residents with an emphasis on a high-touch sales process.

In an update from its 2022 report on the active adult sector, NIC MAP Vision outlined the sector in greater detail with market data not previously available two years ago.

By NIC’s latest count, there are nearly 700 active adult properties comprising 105,000 units. Such communities are highly concentrated in the Northeast, Southwest and Pacific regions of the U.S.

According to NIC Senior Principal Caroline Clapp, the challenge for active adult operators ahead is engaging younger and more active older adults.

“Excellent lifestyle and engagement programming should be majority resident-led and is essential to creating culture and enhancing the resident experience,” Clapp told Senior Housing News. “A second takeaway is that leasing is a high-touch sales process that is most effective when placing emphasis on lifestyle and community.

Clapp said NIC expects the active adult rental model will “continue to evolve” to meet customer needs around changing lifestyle desires, and could lead to operators growing through the creation of “affinity communities, providing a la carte services, and increasing adoption of technology.”

NIC identified sales process benchmarks properties en route to stabilization typically see, including: targets of 25% to 30% pre-leased on opening, with pre-leasing occurring at least nine months in advance of certificate of occupancy.

But active adult also includes operating challenges requiring operators to run leaner and more efficient staff models with fewer employees compared to traditional private pay senior living communities.

NIC MAP Vision data shows that active adult providers typically report 20% to 25% employee turnover, which is lower than the independent living average turnover of 40%

As previously reported by SHN, active adult providers look to stand out from traditional multifamily housing, and operators in the space have forecasted future growth of active adult based attracting residents 55 and older willing to pay for higher rents for lifestyle-based needs.

The active adult sector, like all other sectors in senior living, has seen demand increase. Lower-acuity demand centers on building operations that support resident lifestyle and wellness as prospects demand more active lifestyles in urban and intergenerational environments.

According to NIC MAP Vision data, active adult reported 94% occupancy on average in the third quarter of 2024, with properties five to six years old in NIC markets remaining 96% to 98% occupancy.

Active adult renters are typically “renters-by-choice” and “renters-by-necessity” as renters ages 65 to 74 make up nearly 10% of all U.S.-based renters. That figure is up from 6% a decade ago and is the fastest-growing group of renters of all ages, including those under the age of 55. Demographic trends cited by NIC show that an additional 2.2 million adults 65 and older are projected to consider becoming renters over the next 10 years.

Roughly half of the current active adult inventory was built in the past 10 years, and marks nearly one-third of inventory developed in the last four years as active adult is a “fast-growing market segment” and is comparable to the assisted living development boom in the late 90s.

But the active adult penetration rate lags far behind the wider senior living industry’s average of approximately 11% as active adult average penetration rate is 0.5% that could indicate wiggle room for future development, the updated NIC report states.

Typical active adult developments built recently include unit counts between 140 and 180 units, with an average project size being 136 units with layouts between 650 square-feet and 1,300 square-feet.

Most active adult designs focus on creating spaces that include natural light, clean air and good sound absorption with access to user-friendly services including smart devices. The most common outdoor amenities include an outdoor pool and spa, gardens, outdoor dining space with grills, fire pits, athletic courts, event space and pet parks. Interior amenities including a clubhouse and common area were prevalent in recent developments. 

With a higher valuation per unit of $207,601 compared to the senior living industry’s $195,000, active adult also has a lowered capitalization rate at 4.8%, lower than the broader industry’s 6.9%.

In regard to future trends to watch for active adult, the NIC MAP Vision team called for operators to craft innovative models to meet the higher lifestyle-demands of residents, something that could be done through the creation of “IL Lite,” which includes a mix of independent living and active adult units.

Operators should also consider the opportunity to create ancillary revenue with a la carte services, from special dining events and entertainment to other lifestyle-based offerings.

Another trend includes seeking growth of active adult through a “build-to-rent” model through cottages or villa campuses that can tie into broader independent living, assisted living and memory care services offered by a given provider.

The post NIC Details State of Active Adult in 2024 as Product Type ‘Continues to Evolve’ appeared first on Senior Housing News.