America is aging fast. Currently almost 33 million people are over the age of 65. In 25 years, that number will double. For commercial real estate, these figures represent a continually growing market for retirement housing.

Though overbuilding and a lack of understanding about the market led to high vacancy rates and foreclosures in the 1980s and early 1990s, recent reports indicate that supply is now catching up with demand. A 1994 survey of U.S. senior housing by the American Seniors Housing Association found a median occupancy rate of 93 percent. Nearly 80 percent of the 326 senior housing executives surveyed said they were considering new projects, and almost half of those projects would be free-standing assisted-living residences.

Market Opportunity

From a business standpoint, assisted-living facilities offer an easier, less risky entry into retirement housing than the other market segments. The smaller facilities require less investment and start-up capital for land and construction and have lower operating expenses because they don't use professionally trained medical staff. Less government regulation than nursing homes means more freedom in designing "homier" facilities that appeal to consumers.


Targeting the Right Market

As a developer of assisted-living facilities, Sun America understands unique marketing considerations. The consumer is usually not the elderly person who will be living there. Most often the residents' adult children (usually the eldest daughter or daughter-in-law) choose the housing for their elderly parents or they greatly influence the decision. Accordingly, it is crucial to target both the middle-age and the elderly consumer in marketing an assisted-living community. If marketing is directed toward only one of these two groups, half of the audience is lost before the advertising has begun.

Sun America's successful development is a combination of housing and services. Understanding the specific ADL market helps to identify location and design considerations, as well as the necessary services and amenities that create a marketable facility.

Housing by Sun America Services

  • 24-hour emergency response system
  • electronic security and/or night security guards
  • barber/beauty shop
  • laundry
  • recreation and exercise facilities
  • social programs
  • transportation

The key to providing the right services is to know the target market based on the demographics and economic profile of the proposed community site. More services can be added to the basic menu as the occupants request them or show an ability to afford them. For example, some assisted-living communities have gift shops, ice cream parlors, restaurants, and chapels or meditation rooms.

Payment Sources

Services provided in an assisted-living community currently are not covered by Medicare or Medicaid, an important distinction from nursing homes.

The federal government realizes the need to promote cost-effective alternatives to nursing home care. In fact, in 1987, the government launched an initiative to prevent ADL individuals from entering nursing homes by requiring states to develop and implement preadmission screening programs. Since that time, the federal government has mandated screening not only for elderly individuals who receive federal funding, but also for those who are paying for nursing home services out of their own pockets.

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Housing by Sun America Inc.
7676 Hillmont DR. Houston Texas 77040