Senior living residents prefer larger units, and developers are responding
LOS ANGELES: While the mix of senior housing units hasn’t changed much in the last decade, a trend toward larger units —especially in assisted living — are signaling a shift in consumer preferences. And developers are responding with more two- and three-bedroom units entering the pipeline.
In a second-quarter analysis of senior living unit and occupancy trends across independent living and assisted living, NIC Analytics found that studios still dominate assisted living, but independent living is experiencing expanding diversity in its unit offerings.
Across independent living and assisted living combined, studios make up the largest share of unit mix at 40%, followed closely by one-bedroom units (38%). Two-bedroom units (18%) and three-bedroom or larger options (3%) make up a small share of available options.
Broken down by property type, however, important distinctions emerge, according to a blog post from Omar Zahraoui, senior principal at the National Investment Center for Seniors Housing & Care. Independent living properties skewed toward larger one- and two-bedroom units (46% and 29%, respectively), while assisted living properties were heavily weighted toward smaller studio units (61%), followed by one-bedroom units (31%) and two-bedroom units (7%).
Those differences, according to Zahraoui, may reflect the functional and financial needs of residents.
“Independent living residents often prioritize space, privacy and lifestyle, while assisted living residents may prioritize affordability and accessibility, especially as care needs increase,” he wrote. “Additionally, more couples generally reside in independent living than in assisted living, which generally translates into larger units.”
Looking at occupancy trends, larger units performed better across both independent and assisted living. Although assisted living still maintains relatively high occupancy for studio units, Zahraoui said there is a clear pattern between unit size and occupancy across the board — particularly in independent living.
In assisted living, second-quarter occupancy rates for studio and one-bedroom units was 86%, while occupancy for two-bedroom units rose to 87% and three-bedroom or larger units was at 88%, according to NIC Analytics data. In independent living, three-bedroom or larger unit occupancy was 94%, followed by two-bedroom units at 92%, and studio and one-bedroom units both at 89% occupancy.
Zahraoui said the trends suggest increasing resident preference for more spacious accommodations, even among residents with higher needs in assisted living. And while the mix of units hasn’t changed drastically in the past decade, resident demand for larger units is increasing.
Ten years ago, occupancy was relatively flat across unit types. The exception was three-bedroom or larger assisted living units, where occupancy hovered near 74% range, suggesting a mismatch for the needs or preferences of references at the time, he said. Today, however, occupancy in those larger units is closer to 88%, indicating that preferences in independent living may carry over into assisted living as residents transition through the continuum of care.
“This trend may reflect a generational shift in expectations, or perhaps a cohort of residents entering assisted living with greater financial means or stronger lifestyle preferences for space, privacy and comfort,” Zahraoui wrote.
Developers are taking notice. Studios made up more than half of all senior living units under construction in 2014, but today that share has dropped to 35%, while construction or larger units has “materially increased.” Notably, two-bedroom or larger units, once just 14% of new development, now account for 38% of new units coming onto the market.
Looking ahead, while there are opportunities to market less desirable studios to middle-income older adults, Zahraoui said larger units may gain further traction among middle-income residents seeking shared living arrangements that lower costs while enhancing efficiency and social connection.
“As the aging population continues to transform, the most successful properties will be those that align care needs with lifestyle aspirations, designing unit mixes that reflect not only acuity, but also the changing values and expectations of the next generation of residents,” Zahraoui concluded.