We recently discussed construction starts in the senior housing space and how thoughts of the market being oversaturated appear to be premature. The nation’s aging population continues to drive demand for senior housing services and this is reflected by recent gains in occupancy. For example, according to the National Investment Center for the Seniors Housing & Care Industry (NIC), during the first quarter of 2014, the average occupancy rate for senior housing properties increased to 89.8% from 89.7% when compared to the previous quarter. The combination of occupancy gains, steady demand, and low interest rates, is encouraging many senior housing providers to construct new facilities and examples of this are appearing all across the country, even in markets that were thought by some to be in danger of becoming oversaturated. Minnesota was considered by some to be one of these markets, but this notion is slowly being rebuffed as senior housing providers continue to build facilities there.
The national property development company Oppidan Investment Company has just begun getting involved in senior housing and recently began construction on its first senior housing facility, Red Rock Senior Living in Woodbury, Minnesota. Red Rock will have 24 assisted living apartments, 14 independent living apartments, and 32 memory care apartments. Oppidan was motivated to build a community in Woodbury because of its favorable demographics as demonstrated by comments from its employee Shannon Rusk. Ms. Rusk is the lead developer on the Red Rock project and her statement that “the demographics support more supply” lends credence to the belief that oversaturation in senior housing is not a concern that is shared by every senior housing provider. Ms. Rusk also stated that instead of targeting a specific market, Oppidan “will flex with what is required in a market based on demand determined by a professional study.” And although Oppidan isn’t classifying Red Rock as a high-end facility, it will still include attractive amenities such as a gym, movie theater, hair salon, massage and therapy room, bistro, an activities area, and different dining options. Red Rock is scheduled to open in June 2015 and Oppidan is confident that the $13 million it will have spent building the facility will pay off nicely and it will be received positively in the community.
In addition to Oppidan being active in Minnesota, other companies are also helping to buck the notion that the state is oversaturated with senior housing communities by building additional facilities there. For example, Spectrum Health Companies just broke ground on a $5.1 million, 27,350 square foot, 46-unit assisted living and memory care facility in Aurora, Minnesota. This facility is called Aurora Carefree Living and is scheduled to be completed in January 2015. Aurora appears to be targeting the middle-market consumer as the amenities it plans on offering include housekeeping and laundry services, activities, medication management, and 24-hour staffing.
The construction projects that are underway in Minnesota reinforce the belief held by many analysts that the senior housing market is not oversaturated and that there’s still enough demand to support the building of additional communities in certain areas. Accordingly, senior housing participants who are interested in obtaining financing for growth, acquisitions, or other purposes should contact the Chicago-based financing firm Cambridge Realty Capital to discuss the many different financing options it offers for these and other purposes as well.