FEATURE ARTICLE, JULY 2007

SENIOR HOUSING: THE NEW SCHOOL FOR AN OLDER CROWD
Emerging migration patterns of Baby Boomers are affecting the Southeast senior housing market in many ways.
Craig L. Smith

As 75 million baby boomers begin to enter traditional retirement age during the next 10 years, a ripple effect is starting on the construction and senior housing industries. In what will likely be the largest migration in U.S. history, boomers are again “doing their own thing” when it comes to retirement destinations. Even the term retirement doesn’t fit, as boomers see their retirement years as a chance to explore new adventures, to transition not retire.

Florida’s coastline has long been a magnet for retirees seeking carefree, affordable retirement living in a warm climate. But the baby boomers, those born between 1945 and 1964, are changing the retirement landscape, and that includes choosing nontraditional retirement locations.

The result is that many of the newest crop of retirees are stopping short of the Sunshine State, opting instead for Tennessee, Georgia, the Carolinas and other Mid-Atlantic states. In fact, these states are now among the top 10 boomer retirement destinations, along with Arizona, Colorado, Texas, New Mexico, California, and Florida, according to a study by Pulte Homes. Even Florida boomers are moving to these Southeastern states in such numbers they are termed “half backs.” Florida need not fret however. Boomers represent such a vast consumer block however there will be plenty to go around.

This shift northward is just one effect boomers are having on retirement. They’re also redefining active adult (aka retirement) communities, which is pushing developers to create innovative designs that incorporate modern technologies, enhanced services and place greater emphasis on freedom and independence.

Economic Influences

Some migration patterns remain the same, from urban centers in the Northeast and Midwest to the Sunbelt, still favoring Florida. Of course, Florida will continue to attract boomers and will remain a major destination for America’s newest seniors. There is still plenty of developable land in central Florida, where most of the state’s new generation of active adult communities are being constructed.

Recent events in Florida however have pushed many coastal retirees to the limit. Increasing density, more traffic, and a faster pace have replaced the laid back appeal of the “old Florida” for much of the coastline. With increasing growth and urbanization, congestion and cost of living have increased dramatically.

The biggest current factor is the recent spate of hurricanes that destroyed thousands of homes along Florida’s coastline. It started with Hurricanes Charley, Ivan, Frances, and Jeanne in 2004, followed by the one-two punch of Hurricanes Wilma and Katrina in 2005. Insurance costs increased exponentially in subsequent years.

At the same time, housing demand skyrocketed, dramatically increasing the prices of new and existing homes. For example, in Charlotte County, Florida, where Hurricane Charley came ashore, housing prices rose 50 percent to 100 percent between 2004 and 2006.

As a result, Florida’s overall cost of living shot up, further impacting people’s decision to relocate to or move out of the Florida market. However the 1,000 person-per-day in-migration rate into the state does not appear to have faltered.

Having It Their Way

Economics are not the primary reason boomers are bucking the traditional Florida retirement trend. Boomers have always carved their own path. They’ve redefined everything from youth culture to middle age. So why should retirement be any different?

In a word, boomers are nontraditional. Compare them to their predecessors, the World War II generation. The latter generation, those born between 1900 and 1925, was raised with authoritarian structure, spent decades working for one company, and relied on company pension and retirement plans to carry them through their later years.

Boomers, on the other hand, have an inherent distrust for institutions. They spent the formative years of their adulthood in the free-wheeling era’s of the 70s and 80s. They have disposable income and are willing to spend it. Fewer have pensions, but most don’t believe they’ll ever fully retire.

Plus, most boomers are tech-savvy, which opens new options unavailable to the previous generation. Boomer retirees can use the Web, mobile phones, or Blackberries to stay connected to their friends, families, or workplaces, from whatever location they choose. They will be the first generation to fully enjoy the freedom from place that technology has provided.

New Locations, New Housing Option

More often than not, these new retirement destinations are south of the Mason-Dixon Line, but north of Florida. While climate influenced, locational choices are more attuned to aesthetics and amenities in an area. Tranquil rural settings in Georgia and South Carolina hearken back to earlier simpler life. Scenic beauty of the mountains and seasons beckons boomers to Hendersonville, Asheville and surrounding areas in North Carolina. Proximity to adult children also constrains distances boomers are willing to relocate, many having experienced the travails of caring for aging parents long distance.

In addition to location however, boomers are drawn to custom, lifestyle-attuned communities. Gone are the days of cookie-cutter houses set in endless rows. Today’s retirees want a custom feel to their home; a highly-amenitized clubhouse; pool; tennis and/or golf course, along with other activity-centric amenities. Yes, in these communities size matters. Homes must be large enough for entertaining, visiting families and even home offices. Clubhouses include restaurants and themed grills, complete gyms and some are starting to include business centers. Boomers expect to stay active both recreationally and professionally long into their 80s and 90s, and they want their community to support that lifestyle.

Developers are retooling their design plans to attract this new generation of discriminating retirees. This is most often expressed in active adult communities which combine three key components: larger, more dynamic designs, service enhancements and embedded intelligence. Larger applies both to individual residences, as well as clubhouses and other amenities. Dynamic includes aesthetics—design and finish customization both inside and out—and functionally. Unobtrusive elements such as wide doors, flat thresholds, and lever handles are aesthetically integrated into the décor.

Service enhancement includes traditional services such as lawn and exterior maintenance, security, and general community management. Beyond these foundational services however, a growing array of services are emerging available either from or through the community managers. Restaurant-quality foodservice is provided in clubhouse dining rooms, themed grills, and/or via home delivery. Social activities from tennis to world travel can be coordinated via community social service directors. Housekeeping, laundry and other concierge services can be contracted by subscription or on demand. Non-traditional services such as IT support, secretarial services and video conferencing facilities will grow around business needs.

This panoply of services cannot be delivered or managed without integrated technology. Physically-detached homes have to be connected via fiber-optic cable to a central service hub. As television, internet, telephone and other communications technologies converge, this fiber optic system will become the neural network of the community. Maintenance and management of this IT infrastructure will become one of the most critical responsibilities of community management. Beyond serving media and telecommunications needs, this system supports the interactive community bulletin board, scheduling calendar, service selection, voting structure and opinion blogs. This system will truly meld the concepts of physical and virtual special interest groups.

These three dynamically-combined elements will be necessary to establish enduring lifestyle communities. Early life-stage preferences may involve extensive travel during which remote monitoring and security of the home may be a high priority. Later lifestages may require electronic monitoring of an ill or disabled spouse. Communities in which these elements are well planned and integrated can adapt and react to the changing needs of the community and individual residents efficiently and responsively.

New Destinations, New Era

Emerging differences in migration patterns are indicative of more sweeping changes boomers are bringing to retirement. Transition is a more descriptive term for this generations’ approach to this lifestage.

Nontraditional retirement location choices are influenced by decision criteria unique to this generation. Personal hobbies, activities and proximity are all playing a greater role in location preferences. Information technology has essentially removed the tethers that bound prior generations to specific locations.

These changing migration patterns however are symptomatic of a new era of communities and housing options. Communities will need to combine natural aesthetics and innovation. Mountains, coastlines, deserts, lakes and forests all provide an inviting setting for lifestyle communities. Innovative design which leverages but respects and integrates into these settings will be the frontrunners. Communities which provide larger, innovatively designed homes and community-level facilities, a broad array of enhanced services and integrated technology will emerge as the clear choice.

While the boomers are only in the first chapter of rewriting the book on retirement into transition, sufficient themes are emerging to hint at a plot. No one is surprised that the dominate theme is bucking tradition. It will be interesting to see how this epic novel unfolds.

Craig L. Smith is a national practice leader of Integra Realty Resources’ Senior Housing and Health Care Practice, which provides valuation and consulting services to the senior housing industry. Smith also serves on the Board of the Retirement Housing Council and Advisory Board of the College of Public health and Health Professions of the University of Florida.


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