© The Financial Times Ltd 2016 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
July 5, 2013 6:14 pm
Across America, providers of housing and services for older people are gearing up for the so-called baby boomers: those 78 million Americans born between 1946 and 1964. Some of the oldest boomers, in their late sixties, are already past the traditional retirement age. As some of them look to downsize, the location offering the most choice is on the banks of the Mississippi river: Minneapolis and St Paul, Minnesota, the so-called “Twin Cities”.
By 2040, the population over 65 will grow by more than 122 per cent in Minnesota, while those under 65 will grow by only 6 per cent, says Gayle Kvenvold of Aging Services of Minnesota, an association of housing providers for the elderly. “We see an explosion of need coming in the years ahead due to the baby boomers,” she says. “It’s the age wave.”
The Twin Cities trump competitors on variety, earning Minnesota the accolade “healthiest state for seniors” by the United Health Foundation, while the American Association of Retired Persons ranked Minnesota top overall for long-term care services and support. Tom Melchior, of CliftonLarsonAllen, a company that carries out feasibility studies for developers of housing for older people nationwide, says: “The Twin Cities are on the leading edge.” About 1,200 units will be built in the next 12 months, he says, which is an annual figure that has held steady for several years.
In downtown Wayzata, one of the Twin Cities’ most affluent suburbs, a 14-acre site for older people is under construction. Presbyterian Homes & Services (PHS), the non-profit owner and developer, calls the $225m project a “green community of well-appointed homes” and promises heated sidewalks to melt snow. Phase one is expected to open by November.
Some of Wayzata’s older residents, such as 84-year-old Frannie Atwood, have already opted to rent in Folkestone, a residential complex at the site, to access its “continuum of care”. Accommodation at Folkestone includes 149 independent senior apartments with various levels of assisted living options, and 30 suites offering skilled-nursing care. “After living on the lake for 49 years, it’s a huge change for me,” says Atwood.
Folkestone’s entrance fee averages at $179,000, with monthly rent ranging from $1,667 to $5,100. The centre includes a chapel, restaurant, beauty salon, cinema and two pools. “We have pre-leased 76 per cent of independent living [units], exceeding expectations,” says John Mehrkens of PHS, which has 34 sites in the Twin Cities, with three more under construction and four in the pipeline.
Regatta, another complex at the Wayzata site, is targeted at younger retirees. At an outdoor barbecue to showcase its 63 condominiums, Dean Oborsky, a 72-year-old prospective buyer, predicts the value of the homes will increase. “This is an investment as well as a lifestyle,” he says.
Prices range from $400,000 to $2.4m. Amenities include a dog wash, 24-hour fitness centre and rooftop clubroom, plus access to Optage, the PHS home and community services division.
“These are country clubs for seniors,” says Mary Bujold of Maxfield Research, a company that specialises in assessing housing needs. “This generation has wealth and they want to live in something nice. The baby boomers are hiking demand.”
“You need a dense population of affluent older people,” says Regatta developer Steve Bohl. “This market is so deep, if I can find other properties, I will develop them.” That includes the upmarket Edina suburb where living options for older people are already abundant.
The Waters of Edina – 139 high-end assisted-living rental apartments – opens in October. Rents start at $3,150 per month for a one-bedroom apartment, which includes meals, housekeeping, utilities and wellbeing programmes. Memory Care and Enhanced Care residents pay more, with studios costing $3,700 a month.
The 7500 York Cooperative, the first federally-insured co-op for older people in the US, is another competitor in Edina, south of Minneapolis. Resident owners make up the board of directors and members buy shares for a particular unit, receiving the share value back when they move out.
However, Mehrkens warns that the Twin Cities could face a temporary oversupply until the baby boomers reach their 80s, the threshold when many consider such specialist housing. Moreover, research indicates that many baby boomers – about 64 per cent – prefer multi-generational communities. To meet the need, PHS is expanding its business model for home-based services. In the past year, for example, its Optage service delivered 1m meals, a 20 per cent increase on the previous year.
Already riding that wave is Mill City Commons, a grassroots band of 200 elderly neighbours living near the Mississippi river in Minneapolis. They formed a DIY option with Ecumen, a non-profit provider of housing and services for older people, joining the “village movement” of similar neighbourhood initiatives across the country. Board member Richard Olson and his wife, both over 75, believe the group helps them stay in their own condo and “live life to the fullest”. They pay $950 in annual fees to access help with transportation, meals, chores and medical needs, as well as outings to the theatre. Richard loves his men’s breakfast group and says health support is easily accessible. “We still feel secure on the path to ageing within this close virtual community,” he says.
● The number of Minnesotans aged over 85 will increase 150 per cent over the next 30 years
● The area benefits from more than 20 lakes and wetlands
● Home prices have risen 15 per cent in the past 12 months
● Average home prices are still about 26 per cent below their peak in 2006
● Robust demand for downtown rentals, especially historic office building conversions
What you can buy for ...
$500,000: A two-bedroom condo in downtown St Paul
$1m: A three-bedroom Mill District condo on the Mississippi river
$2.5m: A three-bedroom penthouse in Wayzata’s Regatta development
Please don't cut articles from FT.com and redistribute by email or post to the web.