Talking Economics and Innovation

with the Urban Land Institute By Sara Wildberger


he senior housing sector stole the show in the Urban Land Institute’s (ULI) most recent report on emerg-

ing trends—it was a favorite recommenda- tion of developers and investors. But that report is only one of the ULI resources that can benefi t senior living leaders. The Urban Land Institute was established

to “provide leadership in the responsible use of land and in creating and sustaining thriv- ing communities worldwide” and is now a global organization of more than 40,000 leaders in urban planning and develop- ment. Its Senior Housing Council expert group discusses, shares, and promotes “best practices of real estate development and innovative place making for the age-qual- ifi ed and service-enriched housing sectors, including all phases of the care continuum.” As with all ULI areas, there’s a particular emphasis on innovation, and on translating new ideas and best practices to developers and investors. Chairman of the ULI Senior Housing

Council is W. Aaron Conley, president of Third Act Solutions, a real estate develop- ment and capital advisory fi rm. Here, he discusses the report results and some addi- tional trends and innovations.

Senior housing’s starring role The big news is the top billing by senior housing in the “ULI 2018 Emerging Trends in Real Estate Report.” And it’s not slowing down, having “consistently produced steady income and strong appreciation returns for more than ten years, consistently beating total returns for apartments, retail space, offi ces, industrial properties, and hotels.” The top reason, of course, is the “sil-

ver tsunami” demographics, followed by changes in health care funding regulations.

Another reason: Senior housing has come of out its shell, so to speak, with more ana- lysts, information, data, and media coverage increasing investor confi dence. The top challenges? Inventory, threading

the needle between too much and too little, and labor—that’s labor in the holistic sense, with shortage concerns regarding operators, health care professionals, specialized build- ers, CNAs, dining, and more, with accom- panying wage concerns.

Zooming in a little closer Conley agrees with the basics of the report, and with much of the conventional wisdom about the market. “Senior housing has al- ways been recession-resilient,” he said, “and it’s more and more accepted as a desirable place for investment.” But in addition to the labor challenges—

particularly in the caregiver areas—he points to a few other possibilities. Many believe the trajectory is toward more aging- in-place, at home, but Conley is not sure the demographics will support that—again, it’s largely the caregiver and changes in the home-caregiver labor market that could change that direction. Yet that doesn’t mean older adults will au-

tomatically turn to senior living as we know it. “I’m not sure that the product we have in place, or even new product coming on the market, is really in tune with consumer preferences. And that might be an issue going forward,” said Conley. “One thing we know about baby boomers

is that they’ve always approached things dif- ferently—one size does not fi t all,” Conley said. “The ability to customize choices is really important to them—and that’s anti- thetical to how the traditional senior market has been priced.”


Thought Leader Profi le

W. Aaron Conley Chair, Urban Land Institute Senior Housing Council

What’s new? That’s where the ULI’s traditional mission toward innovation in the built environment comes in. Here are a few trends that might answer that consumer demand: • Infi ll opportunities for redevelopment as well as refurbishment of product on the market that’s hit two or three decades and needs renovation;

• Intergenerational housing—creating spac- es where diff erent ages may not live togeth- er, but will dwell in proximity;

• A shift away from the closed campus or village model to one that welcomes community ebb and fl ow;

• Location. People want to stay engaged with the communities in which they’ve lived and worked;

• À la carte pricing models, with more fl exibility and diff erent service levels; and

• More participation from the multi-fam- ily developer market; this could bring in ideas from the condo and apartment markets.

But innovation has never been an easy sell. “There’s definite displacement be- tween innovation and the capital market to fund innovation,” Conley said, and that’s understandable, given the responsibilities involved.

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