Senior Housing Experiencing a Growth Spurt

With the ranks of the country’s senior citizens growing, and fast, more and more housing developers are seeing green in America’s gray.

Consider: In the San Fernando Valley alone, at least eight retirement communities, with more than 1,400 individual apartments, are either proposed, ready to start construction or opening within a few weeks.

The Valley, and Los Angeles as a whole, saw its population boom after World War II, when returning vets came looking for homes. Now it’s considered fertile ground for an expanding industry that includes names like Hyatt and Marriott. And more developers are expected to weigh in as demographic predictions become reality.

“L.A. in general is probably one of the most underserved markets in the U.S.” said Michael Grust, president of San Diego-based Senior Resource Group, which is planning its first project in the Los Angeles area. Construction of the firm’s 249-unit complex, the Village at Sherman Oaks, is expected to begin next month.

“There will be more people [developers] coming in,” he said, noting that some public companies got into the business in recent years but already have dropped out. “There’s a great allure to serving one of the fastest-growing segments of the population.”

Grust, like other developers, thinks there’s room in the Valley for the various projects on tap now, especially given that some are aimed at specific target markets. Two, of the projects, for example, are for low-income people and are backed by the city of Los Angeles and the U.S. Department of Housing and Urban Development. One proposed complex aims to provide a home for aging musicians. None is strictly a nursing home, though some would have the capacity to offer skilled nursing care.

Today’s current construction list shows a sizable increase from the level of activity of just five years ago, but developers say that in the coming years, the growth in the number of seniors--and in developers seeking to serve them--will be off the chart.

“There’s a kind of bubble right now in the Valley because there are a lot of people who came here in the late ‘40s, and they’re in their retirement years now,” said Stephen L. Taylor, whose Del Mar-based company, Homeplace Retirement Communities of America Inc., is planning one of the largest projects--a 386-unit retirement complex in Northridge called Villa Siena.

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“But where I think the demand is going in the next five, six, seven years is straight up. Between 2006 and 2053, those numbers [of seniors] go due north. That line just doesn’t angle up, it goes straight up. So you have this huge wave that’s coming.”

The U.S. Census Bureau estimates the number of California residents 65 and older will be 6.42 million in 2025, nearly double the 1995 figure.

Ready to serve this expanding clientele are people like Taylor.

His project is one of the more upscale developments planned, a so-called continuing care retirement community that features one-, two- and three-bedroom apartments for the able-bodied, as well as separate assisted living units in which residents can get help with anything from bathing to taking medicine on time. The complex will also have a section offering skilled nursing care.

But the price for entry is not cheap.

Such communities--there are more than 50 in the state--often charge an upfront entrance fee that can range from a few thousand dollars to $1.6 million. That’s separate from the monthly rent, which can be more than $1,000.

At Villa Siena, the entrance fee ranges from $175,000 to $400,000, depending on the size of the apartment and the services rendered. It is partially refundable and essentially buys the residents access to a retirement community where they can “age in place,” with the promise that management will provide additional levels of care as needed.

Taylor recognizes that some might balk at the heft of the upfront payment but said he believes rent at his complex will be substantially less than at communities offering similar amenities that do not charge the fees.

Continuing care communities must be licensed and are tightly regulated by the state Department of Social Services to help protect residents against fraud.

Wanda James, corporate director of marketing for Southern California Presbyterian Homes, is among those who fears that as more companies get into the senior housing business, the potential for fraud will increase.

“Unfortunately, I think there is” increased potential, said James, whose nonprofit organization operates 24 senior housing communities and has a new one, Kirkwood Assisted Living Residence of Glendale, set to open at the end of June.

“How hard is it to pick on a 90-year-old woman with a trust fund? I’m hoping that as we have more and more companies coming into the business, there will be more and more safeguards” put in place by state regulators, she said.

Several of the firms that will develop or operate the Valley’s new retirement communities are nonprofits, but at least one of the nameplates belongs to one of the world’s best-known corporations: Marriott International.

Marriott, through its 16-year-old Marriott Senior Living Services division, hopes to begin construction next month on the 162-unit Brighton Gardens of Northridge complex.

The complex will offer 91 assisted living units, as well as skilled nursing care and beds for Alzheimer’s patients.

Although still a fairly small part of the operation of Marriott International, a company that last year had $8.7 billion in revenue, the senior living division is growing, according to Roger Conner, vice president of communications.

Last year the unit brought in $560 million in revenue, up 17% from 1998.

Still, Conner said the company, fearing that too much was being built too fast industrywide, is pulling back.

“In our annual report, we did acknowledge that we’ve made a decision to slow new construction of our senior living communities due to oversupply conditions in certain markets,” said Conner, adding that he did not know if Los Angeles was considered one of those oversubscribed areas.

Grust, of the Senior Resource Group, doesn’t think it is.

He said he believes the Valley, and Los Angeles in general, is underserved in part because of changes in the approach to building such communities.

“Fifteen, 20 years ago, the approach was to build retirement communities off in the sylvan fields,” said Grust. “But today, these people want to be part of the action,” staying close to friends, family, doctors, even hairstylists.

In tightly compacted areas like the Valley, that means finding so-called in-fill space. And that puts such projects in competition for space with everything from big box retailers to office towers.

Near the North Hollywood arts district, where the city is trying to jump-start an urban renewal program, some residents questioned whether building a retirement community is the best use of prime land owned by the Metropolitan Transportation Authority near its soon-to-open subway.

Backers of that project, the National Academy of Recording Arts & Sciences, are still negotiating with the transit agency to secure use of the land.

Encore Hall, which would offer both assisted and independent living units for able-bodied seniors, would stand out in the crowded field because of the target clientele, according to academy spokesman Adam Sandler.

“Did we know there were other projects? Yes. Do we think it impacts our project? No, we don’t. We believe the uniqueness of our project fills a specific niche market,” he said, speaking of plans to market to musicians. “And we believe there are plenty of potential residents for it.”

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Similar comments were made by Ruperto Albelda, an assistant director with the Los Angeles Housing Department, when he talked about the two low-income projects planned for the Valley: Vintage Crossing in Canoga Park and Noble Senior Housing in Sherman Oaks.

“Most of the other projects are market projects,” he said, making a distinction between those and the city-backed projects that are for low-income seniors only. “Affordable housing is much, much different from marketing housing.

“There are senior housing projects being built all over the city,” he added. “Some of them are luxury; some offer assisted living, which we can’t do because of HUD rules.

“I don’t think there’s a glut,” Albelda said. “The agencies we work with say they have a long waiting list. People are living longer.”

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Valley@Work runs each Tuesday. Karen Robinson-Jacobs can be reached at Karen.Robinson@latimes.com.

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Retirement properties developing

A construction boom is developing in the Valley to serve the region’s seniors. In all, more than 1,400 apartment units are planned.

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Source: City of Los Angeles; developers