I was reviewing the various names our industry has used to describe the senior living property sector when I noticed that one appears to be picking up steam: independent living facilities.
The definition of independent living refers to more than facility type — it means a perspective on care that does encompass elderly care without stopping there.
The Shifting Definitions
As seen by its advocates, is a philosophy, a way of looking at disability and society, and a worldwide movement of people with disabilities working for self-determination, self-respect and equal opportunities. In the context of eldercare, independent living is seen as a step in the continuum of care, with assisted living being the next step.
The term has different applications as well. In the very useful glossary at SeniorHousingNet.Com, independent living is characterized two ways — first as “Multi-unit senior housing development that may provide supportive services such as meals, housekeeping, social activities, and transportation (Congregate Housing, Supportive Housing, Retirement Community). Independent Living typically encourages socialization by provision of meals in a central dining area and scheduled social programs.”
Yet within the very same definition, we find that independent living can also be used to “describe housing with few or no services (Senior Apartment)”
With a spread of definitions that broad, the appropriate terminology needs a much closer look before a pro forma is drafted for prospective investors. And as with so many other commercial real estate specialties, state regulation looms very large in making these definitions stick (or not).
ALFA and state regulation
The Assisted Living Facility Association (ALFA) is very active in all the areas one might expect a national trade association to be, including providing regulatory resources that spell out guidelines, licensing terms and answers on a state by state basis.
Improved residential markets means getting rent payments cash out of home equity is getting easier
According to Marcus & Millichap’s latest report on the sector one thing driving a great deal of growth in independent living facilities is the access to equity in their homes by seniors. A rejuvenated residential market has re-opened the pathways to obtaining the rents late in life that drive the independent living market sector. As Paul Bubny at GlobeSt says:
[…], the pipeline is filling up for independent living facilities, with MMI predicting that new construction will add 2.4% to the existing stock. Thanks to an improving residential market enabling seniors to unlock equity in their homes, MMI says IL occupancy is expected to rise 50 bps to 92.3% by year’s end, while average rents advance 3.1% to $2,923 per month.