Manhattan is about to become a testing ground for what could be the next luxury real estate boom. Well, maybe mini-boom, considering the rather narrow target group: frail urban seniors with fat bank accounts.
Developers are spending hundreds of millions on high-end assisted-living apartment projects, one on the Upper East Side and one in Midtown, and aiming for more in the area and across the U.S. The bet is that there are sufficient numbers of the affluent and aging in big cities who won’t want to leave their neighborhoods, even as they suffer cognitive decline.
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It is, of course, a rather small group of any age or mental ability that can handle the monthly rents these kinds of places will command. They’ll start at $12,000 at the complex that Maplewood Senior Living and Omega Healthcare Investors Inc. are putting up on Second Avenue and 93rd Street. Some will top more than $20,000 at the building Welltower Inc. and Hines are about to break ground for on the corner of 56th Street and Lexington Avenue.
They’ll boast the usual luxury frills like uniformed doormen and lush landscaped gardens. But they’ll also incorporate special features for the elderly and memory impaired, such as sharply contrasting wall colors in bathrooms to help those with poor eyesight identify fixtures and hallway lighting designed to encourage sleep at night.
“The risk is that you’d be the anti-Field of Dreams — you build it and they don’t come,” said Michael Knott, managing director at Green Street Advisors LLC, a real estate research company. “But the absolute lack of supply of this product provides some comfort that even though these are pioneering projects, there will be demand.”
The elderly with dementia or Alzheimer’s are an under-served cohort, whatever their income. According to Welltower, there are just 70 licensed memory-care beds in Manhattan. And while the borough is over-saturated with posh condo offerings, no new assisted-living facilities have opened there since at least 2005, when the National Investment Center for Seniors Housing & Care began tracking the projects. There are only 622 such units in the borough, with a median occupancy of 97% and average rents of about $6,020.
“We’re seeing people who are in New York, wanting and demanding to live in New York, but there’s really nothing available,” said Greg Smith, chief executive officer of Westport, Connecticut-based Maplewood, which owns 13 senior communities, most of them in suburbia, and a 48-acre farm from which it sources food for its properties.
U.S. population, by single year of age (Image: Census Bureau)
And if there was ever a good time to dive into Manhattan, this could be it, with deluxe residences going begging and land values down 21% so far this year, according to brokerage Cushman & Wakefield. “Because of what’s happening broadly in real estate in New York City, it feels like the winds are moving in a direction that will allow us to find good sites,” said Thomas DeRosa, CEO of Welltower in Toledo, Ohio, the largest publicly traded senior-housing owner by market value.
Both Welltower and Maplewood are scouting for additional locations in New York, and in other major metropolitan areas, anticipating the so-called silver tsunami that will double the U.S. population of 80-somethings in the next two decades. In fact, Maplewood’s New York complex is the first in a planned international brand of boutique senior properties called Inspir that is considering sites in Los Angeles, Miami and London.
At the 23-story, $270 million Maplewood-Omega tower on the Upper East Side, residents will enjoy farm-to-table dining, a spa, a movie theater and a “sky park” on the 16th floor that will feature a flower-lined walking path and a sun porch. Smith said he views the project as “a hotel brand — a high-end luxury hotel brand.”