University Based Retirement Communities…If You Build Them, Will They Come?

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University Based Retirement Communities…If You Build Them, Will They Come?

Our senior population is flourishing and as it continues to expand, the face of senior housing is evolving ever more, with new wants and desires guiding the latest trends in development. It is widely known that the Baby Boomer Generation, one of our nation’s largest age cohorts at nearly 80 million strong, is entering into its retirement years, with many Boomers there already. Born between 1946 and 1964, the oldest are 70 years of age, while the youngest are 52, and approximately 10,000 turn 65 every single day. Certainly, it is not a group to ignore and providers of senior housing are taking notice. And universities are taking notice, too, as they search for new sources of revenue in the face of anemic growth in student enrollment and declines in state funding. With housing providers looking for new opportunities to capture the rising demand and universities looking to improve their bottom lines while staying true to their missions, the two are joining forces to create University Based Retirement Communities (UBRC’s), i.e., college-affiliated retirement communities located on or near campuses. UBRCs not only provide residents with access to educational and social opportunities, as well as campus facilities, but also supply students and faculty with additional teaching, research, and volunteer possibilities. However, the success of a UBRC is never a guarantee and the complexities of development and operation require prudent planning. This white paper explores the rise and popularity of UBRCs, the challenges of UBRC development, and the steps to mitigate risk with market research.

Unlike their parents of the Silent Generation, Boomers have not hesitated to express their opinions and to reshape environmental landscapes at nearly every stage of their lives. And many are well educated, placing high value on lifelong learning. According to an analysis recently completed by Pew Research Center, 17% of male Boomers and 14% of female Boomers completed at least four years of college, which compares to 12% of their fathers and just 7% of their mothers. (The jump in higher educational attainment among female Boomers is particularly relevant, as women, having higher life expectancies than men, are more likely to reside in retirement communities.) So, while their parents frequently found solitude in retiring in traditional, mostly autonomous, retirement facilities, often with resort-like features and largely disengaged from their surrounding communities, Boomers are tending to opt for models with intellectually stimulating, social, and intergenerational opportunities. Boomers are more inclined to relocate upon retirement, too, and in doing so, they are searching for settings that will allow them to remain active in both mind and in body.

Hoping to capture the attention of the Boomer Generation in an increasingly competitive marketplace, providers are turning their focus to housing options that offer unique experiences. At the same time, universities, also wishing for a slice of the pie, regard Boomers as potential customers (e.g., participating in university classes, accessing campus facilities, mentoring younger students, and taking part in geriatric research). And for universities with underutilized land, UBRCs offer the possibility of added revenue in the form of a land sale or lease, as well as a means to improve surrounding neighborhoods. Additionally, with alumni accounting for 10% to upwards of 30% of a UBRC’s resident population, universities may see a rise in charitable giving, too.

With the possibility of a win-win outcome for providers and universities alike, UBRCs seem a natural outcome, with the latter lending a sense of credibility and history to communities. And it is without question that UBRCs are not only here to stay, but are also rising in popularity. However, while the benefits are clear, there are added risks, too, that come with UBRC development.

While there is added value in providers and universities coming together to partner, UBRC development brings complexities, such that success is never a guarantee. There is no standard formula for a UBRC and aside from offering a common theme of lifelong learning, there are widespread differences among communities. For instance, some UBRCs target active adults aged 55 and over, while others target seniors 75 or 80 and over (with an average resident age of 84) and provide three or more levels of care to allow for aging in place. Also, the formality of provider-university relationships can range from a simple alliance through which mutually beneficial programs are developed to a more complex financial and/or risk-sharing partnership. Further complications arise when the parties are faced with decisions regarding intergenerational program development, space-sharing logistics, location considerations, and access and safety concerns. And as with all real estate endeavors, marketplace fundamentals must be supportive, too.

Even with the aforementioned partnership complexities settled, project planning flounders if demographic trends, alumni influence, senior preferences, competition, and other market factors are not understood and accounted for. Do local demographics validate UBRC development and if so, at what size and price point and for which level(s) of care? Do they call for an active adult community or one for older age groups in need of additional support? Can providers and universities rely on college alumni to fill units and will seniors find the proposed location, amenities, and programming attractive and the environment safe and accessible? Is the market currently saturated with senior housing options such that demand falls short of supply and occupancy levels are threatened? Answers to these questions are essential components of project pre-development and without them, the odds of failure escalate.

To adopt a cookie-cutter approach to UBRC development and to assume that a standard UBRC model will universally succeed is shortsighted. Like any real estate endeavor, market fundamentals and local preferences often dictate the fate of a UBRC. With that said, while there is no guarantee of success, the risk of failure falls substantially if prudent planning and market research are conducted early in the process. Michael Starke, Managing Director of PMD Advisory Services, a national market research and consulting firm specializing in senior living and health care, advises UBRC developers to acquire a thorough comprehension of demand, along with knowledge of the competition, location viability, and senior preferences. Well-versed in UBRC research, Starke recommends a combination of Market Analysis and Consumer Research, thereby creating a two-prong approach to aid in decision-making throughout the UBRC planning process. Prior to making significant, irreversible investment decisions, PMD counsels providers and universities considering a UBRC to engage in a Market Analysis, i.e., an assessment and quantification of potential market demand for the proposed development. In a Market Analysis, the local market’s demand and supply fundamentals are thoroughly scrutinized to determine market depth and also, the chosen UBRC site is meticulously evaluated to further establish viability. The Market Analysis provides guidance not only of optimum unit counts, but also of product type (e.g., active adult, independent and assisted living, memory and skilled nursing care), unit type and mix, unit size and features, pricing, project amenities, and service packages.

Market Analysis: Demand Assessment
In the demand component of a Market Analysis, demographic data of targeted households residing within the PMA are assessed. During this step, PMD Advisory Services, for example, draws from its own senior demographic segmentation database, which provides detailed estimates of senior households by age, income, and need living within the PMA. Then, with data in hand, the numbers can be analyzed, making possible a preliminary quantification not only of demand overall, but also of demand for each product type. And by further establishing the PMA’s Active Adult and Senior Market demographic profiles (reflecting trends in population, age, activities of daily living, marital status, living arrangements, and income), demand can be clarified by price point, too. (Note that in addition to senior households living within the PMA, there may be local households of adult children with senior parents living elsewhere. They should also be accounted for in this part of the analysis.)

While the PMA is considered to be the area from which the majority of potential residents will likely be drawn, unique to a UBRC is the additional demand derived from university alumni, retired faculty, and former administrative staff, many of whom live beyond the local geographic area. As such, PMD suggests studying not only age and income-qualified households residing within the vicinity of the proposed UBRC, but also age and income-qualified university constituents that may be currently housed elsewhere. In gauging the supplementary demand derived from alumni, emeriti, and former staff, university records play a key role. In a UBRC Market Analysis, PMD’s Starke, for example, works hand-in-hand with university offices to determine the number of age and income-qualified university constituents and further tabulates the counts by area. Five areas are of interest to him, namely the primary market area (using zip codes), the surrounding counties, the balance of the state, the adjacent states, and the remainder of the U.S. And in establishing age and income qualification, PMD advises the use of surrogate criteria, such as graduation year and major for alumni, year of retirement for emeriti (assuming all emeriti are income-qualified), and year of retirement for former exempt administrative employees. Starke then layers these results into the demand already quantified from the analysis of PMA-derived demand (see preceding paragraph).

Market Analysis: Supply Assessment
Also in a Market Analysis, the local competition is thoroughly scrutinized, as is the proposed UBRC’s location. For this component of the analysis, Starke says the field survey is key. During a field survey, analysts “become local,” developing intimate knowledge of the PMA by driving the surrounding area; visiting and meeting with key competitors; speaking with local planning agencies, areas on aging, and senior centers; and inspecting the subject site. An in-depth investigation of the potential UBRC’s most competitive communities (both existing and planned) is completed, thereby allowing for key attributes, such as size, occupancy, unit mix, pricing, services, and amenities, to be collected and assessed for each. And with this information in hand, one is able to gauge the market’s appetite for various features and to identify gaps whereby untapped opportunity remains.

Market Analysis: Putting it all Together
When the results of the demand and supply assessments are considered in tandem, the likelihood of success for the proposed UBRC can be gauged. More specifically, a detailed count of targeted households (both from within the PMA and from alumni, emeriti, and former staff living elsewhere), combined with a thorough evaluation of competitive units, allows for careful estimation of unit demand for each senior housing type. In carrying out this component of the analysis, PMD applies market capture and penetration models to the information gathered, thereby computing the supportable number of units for independent and assisted living, memory and nursing care, and active adult products. And when conclusive opinions concerning location and a concise inventory of competitive attributes are layered into the analysis, solid recommendations regarding pricing, unit features, services, and amenities can be made and the overall viability of the project can be determined.

While the results of a Market Analysis are frequently clear and either support the project as proposed or indicate a lack of market support for such a development, they can sometimes be inconclusive or raise unanswered questions about the project. Should the outcome of the analysis identify unresolved issues or concerns about the development, Starke advises clients to proceed with further investigation by way of Consumer Research. This is particularly relevant for UBRC development, which offers a unique amenity package and draws from multiple target markets.

Consumer Research
For a UBRC to be successful, all stars must be aligned and even a UBRC built adjacent to the campus of a reputable university can be doomed if market fundamentals fall short. As noted, market research early in the planning process can help mitigate development risk and enhance the likelihood of success. And while a data-driven Market Analysis can and should be carried out to determine the depth of demand, its findings may lead to further questioning. For instance, if the analysis determines local demographics to be unsupportive or market saturation to be foreboding, is there sufficient opportunity to capture demand from outside the immediate area? Are the demographic trends of alumni and emeriti unclear and will the UBRC be attractive to those living beyond the local marketplace? Will alumni et al be more receptive to the project than those without ties to the university? In some cases, the response may be yes, but in others, there may be reluctance and hesitation. What will motivate alumni to relocate and will they be willing to pay for the additional services and amenities proposed? For answers to these questions, Consumer Research is key and serves not only to answer ambiguous questions, but also to better quantify demand from those living outside of the local geographic area. When inconsistencies in the data arise or initial research findings prove inconclusive, PMD’s Joan Schimmel advises providers and universities to engage targeted seniors directly in the research process.

As PMD’s Director of Consumer Research, Schimmel reaches targeted seniors with quantitative surveys and qualitative focus groups. Using these tools, she is able to directly ask for opinions on project concept, layout, and location, as well as amenities and services. And while useful in assessing receptivity of alumni living beyond the immediate area, it is useful, too, in questioning local seniors. For instance, if demand and supply fundamentals within the vicinity seem supportive of new development, yet the proposed site remains dubious, inquiries regarding the attractiveness of one or more location alternatives (e.g., perception of safety, accessibility, proximity to services, etc.) can provide the conclusive evidence necessary during the decision-making process. Consumer Research can be employed further to evaluate and prioritize amenities and services. For example, Ms. Schimmel often invites targeted seniors to identify proposed features they find most and least desirable. What seniors in one marketplace find important can vary widely from those of similar age and income residing in other market areas. Marketing messages and prices can be tested in this environment as well.

While not a substitute for a data-driven Market Analysis, Consumer Research is a complementary tool, providing a qualitative analysis alongside the more quantitative results of the Market Analysis and it is often a key component in the overall research undertaking. It is yet one more measure to help gauge a UBRC’s likelihood of success.

It is without a doubt that as Boomers enter their retirement years, they are changing the face of senior housing development. Unlike generations before them, many Boomers are foregoing resort-style living in autonomous communities and instead, are opting for environments that are active, intellectually stimulating, social, and intergenerational. Looking to capture a share of this emerging demand and to secure their revenue streams, senior housing providers and universities are coming together to create University Based Retirement Communities. But while there is value in the two to partner, complexities abound and there must be more than just a common goal for success to unfold. Challenges stem not only from negotiations regarding partnership details (e.g., roles, responsibilities, and financial obligations), but also from decisions relating to targeted age, levels of care, alumni influence, pricing, amenities, services, etc. And key to all successful real estate endeavors are sound market fundamentals, such that the relationship between demand and supply allows for maximizing untapped opportunities.

With challenge comes risk; however, by engaging in market research early and throughout the planning process, threats of failure become mitigated. A Market Analysis yields data-driven recommendations regarding demand, which are useful both in the initial stages, such as when preliminary proformas are tested, and during later phases, when project details must be finalized. And to clarify findings of the Market Analysis, Consumer Research provides additional insight into the attitudes and preferences of potential residents. The two are not mutually exclusive, but complementary, and when armed with the results of these research products, the danger of unnecessary spending lessens and the likelihood of developing a winning UBRC escalates.

As PMD’s managing director and a renowned speaker and contributor in the senior housing field, Michael Starke draws on his 30 years of market research experience to help clients navigate the often turbulent path of housing development for our aging population. Having directed numerous UBRC studies, Michael, drawing on the expertise of Consumer Research Director, Joan Schimmel, and other PMD team members, works with providers and universities alike to quantify the demand for additional housing and to determine specific project attributes.

To lessen your development risk and plan for a successful UBRC, contact Michael at (859) 689-9420 or

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McCain McMurray Board Chair, Andrus on Hudson
PMD supported our strategic planning efforts with a particular focus on market demand and consumer input regarding senior living options.    Their Market Feasibility Analysis and Consumer Research Study provided us with the qualitative and quantitative market information necessary to support our strategic planning initiatives. Their market research was instrumental in educating our Board regarding specific market issues and consumer expectations.  PMD consultants were professional,  responsive to our needs, and a pleasure to work with.
Michael A. O'Brien President and CEO, Duncaster Lifecare Community
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