November 28, 2012
Seniors Flocking to Florida
Sometimes cliches exist for a reason. When many people think about Florida, they picture Disney World, warm weather and retirees. Florida continues to be a hot-spot for senior citizens seeking to relocate, particularly as they look to escape colder northern climates.
Despite the economic downturn, not every state’s senior living development has been affected the same. Developers are once again building senior housing developments in Florida, thanks to the higher than average senior population that continues to demand more senior housing. When the economic downturn occurred, most development stopped. Despite the drop in development, the demand for senior housing kept building. Now that the economy has begun to recover, there is not enough development to keep pace. Now there is a lot of demand in the Florida market for senior housing, and particularly in the major markets: Tampa, Orlando and the West Palm Beach area. Orland, in particular, had 404 units under construction as of the third quarter of 2012, followed by Miami with 245 units and Tampa with 137 units. In fact, Orlando’s third quarter senior housing construction versus inventory rate, at 4.58%, exceeds the 1.99% of the top 31 market area profiles compiled by the National Investment Center for the Seniors Housing & Care Industry.
Florida has been dealing with challenged housing markets, but developers and operators have started looking at land again for new development because it has been re-priced. Several years ago, many land parcels would have been sold to condominium developers. Now, however, the land is being reduced in price by one-third or even one-half. The new affordability now allows senior housing developers to fit per-unit price into their model where it makes sense, whereas it did not fit several years ago.
Florida’s senior living development industry has also benefited from the emergence of assisted living. While there has not been much new construction of nursing homes, assisted living has provided an option for senior citizens seeking a more independent lifestyle. In addition, the ownership and operation of assisted living facility is much simpler, with less regulation, than traditional nursing homes and other skilled nursing facilities.
With the increase in development, senior living developers are looking outside the larger markets for developing opportunities. Many developers believe that the senior citizen population in Florida is growing fast, but outside the larger cities. Senior housing is a unique industry with regard to choosing development sites. Most senior citizens will value a location that is close to regional providers of healthcare services, as well as adult activities. Developers must often balance the matter of land cost against the proposed location.