“But they also want the peace of mind of knowing that if they just want to stay and have somebody else prepare the meal, they have the option.”īy scaling back offerings typically available in an independent living community, Essex can lower rates for residents without diminishing the overall value proposition.Īdditionally, staffing communities more efficiently can go a long way, according to Pane. “Most people want the ability to cook themselves or to dine in their favorite restaurants,” said Pane. The Essex Strategy can be summarized as “independent living light.” – “Or, independent living unbundled,” Pane said.įor example, in an Essex community, residents can partake in a continental breakfast, but evening meals are optional. The company’s model is based on scaling down certain services and building cost savings into development and construction.Įssex will open doors at two new middle-market communities in 2023, with three additional communities in the pipeline, representing the firm’s first step into South Dakota and Texas, according to Pane. Omaha, Nebraska-based Essex pivoted from an entrance fee model to a middle-market rental model in late 2020.
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For example, Greystar – the largest operator of multifamily units in the U.S, – is growing a portfolio of middle-market active adult communities under the Album brand name. Reaching middle-income older adults with an active adult product is something some sizable real estate companies are exploring.
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While achieving middle-market rates is not always feasible for senior living operators given the care-intensive nature of the business, it is easier to do with a lower-acuity resident base like the one currently found in active adult. One popular niche for active adult companies is the middle market. Given that interest, some companies including Essex, Clover and Avenue are staking their futures on differentiating themselves from the rest of the pack. “I think in the long run, as developers are prudent and appropriate with the decisions to build, then it can be a successful product.” “My bearish thoughts on the short-term relate to too much construction too quickly,” he said. If current trends continue and the sector stays hot for new construction, Pane worries that could lead to “negative consequences” in the form of overbuilding.īroader headwinds, such as a recession, could hurt the product type, given that it is more of a lifestyle-oriented product than a needs-based one, Pane added. “It’s not a product I would be building unless it’s extremely well-located,” Pane told Senior Housing News. Though Essex is building communities that could fit the definition of active adult, he is actually “bearish” on the sector in general. For instance, Minto Communities is expanding its Latitude Margaritaville brand into three markets in Texas after seeing a surge of demand.īut growing interest in the active adult sector could spell near-term trouble for developers or operators already in the space, according to Frankie Pane, president and COO of Essex Communities. Some other real estate companies are taking advantage of the active adult momentum. The REIT has also made its own forays into the space in the past. REIT last year announced plans to scale up with active adult developers Treplus Communities and Sparrow Partners. Toledo, Ohio-based real estate investment trust Welltower has been a driving force behind some of the sector’s recent growth.