Every day in the United States more than 10,000 baby boomers retire. This trend is expected to continue for the next several years and will only increase what is an already strong demand for seniors housing. As the nation’s population gets older, senior living providers continue to look for ways to meet the increased demand this is generating for senior living communities. Of course, building new properties is one way to address this demand, and construction is projected to pick up now that the extreme winter weather conditions that most of the country experienced  have dissipated. However, another method that some senior living providers are exploring is converting other building types to senior housing. Although these conversions can be costly, for some senior living providers it makes perfect sense for them to do so.

When it comes to the types of buildings senior living providers are exploring for conversions, defunct hotel buildings are often at the top of the list. In the past, providers have looked to the hospitality industry for ideas on amenities and other unique offerings that they could use in their own facilities, so it should come as no surprise that many of them are now exploring conversion opportunities with hotels as well. While initially the process of converting a defunct hotel into a senior living community sounds like it’s easy to do, in reality there are often substantive challenges that have to be overcome in order for this to happen.

The most common challenge that senior living providers face with hotel conversions is satisfying the many different codes and regulations that apply to seniors housing. For example, local regulations might call for ceilings to be at least a certain height, corridors and hallways to be at least a certain width, mechanical, electrical, plumbing, and fire protection systems to have certain capabilities, and rooms to be a certain size. Furthermore, in addition to satisfying local regulations, there may also be additional state regulations that have to be satisfied for a conversion to take place. For example, in certain states multi-story assisted living facilities must be made with non-combustible materials like metal studs. However, in other states this isn’t necessary and wooden studs can be used instead. For these reasons, before embarking on a hotel conversion project it is very important that senior living providers are up to speed on all of the applicable codes and regulations that must be satisfied, and must factor the cost of doing so into the other costs associated with the conversion. Depending on the state and locality, after conducting an analysis the provider might find that it would actually be more cost-effective to construct a senior living community from scratch instead of converting a hotel or other property into senior housing. Generally speaking, it’s easier to convert hotels into independent living facilities because they don’t have as many requirements as assisted living facilities; however, a full analysis should still be conducted for potential independent living conversions as well. Other factors to consider include the cost of adding additional amenities to the building after it has been converted, such as a fitness center, large dining areas, theater room, or rooms to host social gatherings and other activities.

While the cost of converting a hotel into a senior housing community can be significant, it can also be worth it if there is significant demand for senior housing in the area and the provider can charge rates that are high enough to generate strong revenues. As demand for senior housing continues to grow, senior living providers that are interested in obtaining capital for growth or other needs should continue to look to the successful financing firm Cambridge Realty Capital and the many different financing options that it offers for their capital needs.

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