| While Southern
California faces a shortage of some 8000 congregate care and assisted
living housing units for its senior citizens, a rash of upscale
projects are planned, leaving conditions on the affordable end of the
spectrum severe, according to the top health care facility executive
for a veteran Southland commercial real estate company. |
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| Virtually every
submarket within the Los Angeles Basin is about to experience a flood
of senior housing projects. |
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| After a period of
almost no new seniors facilities being built in the region, the market
is being flooded all at once because of a lot of money is being made
available for developers of these facilities. Many major
corporations, notably publicly-held companies which need to meet
growth projections, are in the fore-front of this movement. |
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| Having completed over
$70 million in senior housing and long-term care facility transactions
during the past seven months, I lament that the new projects in the
pipeline in the Los Angeles Basin are earmarked almost exclusively for
the upscale end of the market. |
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| Until recently, there
were very few high-end assisted living facilities in the San Fernando
Valley, for instance. The Wedgewood complex in Tarzana and, more
recently, Inn On the Boulevard in Studio City, were the lone examples.
The Country Villa is planning another high-end complex in West Hills. |
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| Because assisted
living facilities are private pay, as opposed to nursing homes which
are substantially publicly paid, coupled with rising land prices and
community resistance to affordable units, developers are focusing on
upscale projects. |
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| Developers feel that
if they're going to do private pay facilities, why not shoot for rents
in the $2500 range. This compares to typical assisted living
facilities in the Valley renting from $1200 to $2000. |
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| Because there are four
projects concurrently underway in the Valley area alone with a total
of 250 units, fill-up times could increase to up to three years
instead of the typical 12-18 months. Everyone is developing
high-end projects at the same time, which may also cause rental rates
to drop, perhaps as much as 20%. |
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| Because of this focus
on high-end seniors projects and their perceived inherent higher
returns, the moderate and affordable end of the market is suffering. |
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| Currently, we are only
addressing the high end. We need to focus no the lower and
middle income seniors market, those in the $750 to $1400 rental range.
To achieve this, it will take local communities to support such
projects, working with operators and developers to provide quality
sites and tax incentives to create housing for all their citizens. |
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| The problem is that
many residents don't want to see this type of housing. They
harbor such myths as senior housing lowers property values. In
fact, assisted housing has been shown to increase property values 25
to 30 percent. Moreover, such projects create jobs in
localities, provide less demands on the infrastructure, are
essentially crime free, and help the community in terms of such
initiatives as pet programs for kids, foster grandparent programs and
others. |
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| Unfortunately, many
communities also relegate seniors projects to fringe or deteriorating
areas of their cities. |
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| Communities need to
understand that when a developer attempts to build a seniors facility
in their community, they need to allow it within the interior of the
city, not on the fringes. They need to realize that these
projects benefit the total community by providing for the elderly as
well as the young. |
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