Senior housing presents an interesting dichotomy. On the one hand, this asset type is specifically developed for aging individuals, located in communities with the right amenities, and can be near (or actually provide) medical care.
On the other hand, McKinsey & Company said that “only 5% of seniors move in,” internationally, prompting the question about how the industry can help support older people while expanding successfully.
Katy McLaughlin of McKinsey Global Publishing spoke with company associate partner Sam O’Gorman to explore the topic in more detail.
While the reason for the anemic move-in percentage could be laid at the feet of “cost,” O’Gorman suggested that this isn’t the case. The majority who were quizzed said they can afford senior care. But they also want to stay in their own homes for as long as possible.
“I think the default assumption for many people is, ‘I’ll stick it out in my own home for as long as possible. And then, when I really have to, I’ll move into a care home of some distinction’,” O’Gorman said. But this leads to individuals residing in unsuitable properties for up to 20 years and longer than they should be. “They end up living in a kind of hiatus where it’s suboptimal for an extended period of time,” he added.
Another reason for the hesitancy is that senior housing tends to be an “all-or-nothing deal.” In Australia, New Zealand and the U.K., people buy senior housing units, while in the U.S. and Canada, the asset type is mostly rental, requiring a substantial deposit.
O’Gorman suggested one way around this was a “try-before-buying” factor, allowing seniors to rent for a specific period in locations where senior housing units sell. Meanwhile, in the U.S. and Canada, “offering a three-month lease instead of requiring a full year could allow people to dip their toes in the water,” O’Gorman commented.
Another barrier is not knowing about all senior housing options, as people assume that senior housing is the same as care or nursing homes. “The industry could both improve its communication and expand its marketing and outreach,” O’Gorman said, adding that marketing to an older person’s support system can also be beneficial.
Even with the above suggestions, O’Gorman acknowledged that senior housing isn’t for every older individual. He said the high point of uptake in some markets would be 10%. “I think the question operators should ask themselves is, ‘How do we offer services and support to that pool of people who are unlikely to be customers?’” he added.
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