Over the last 40 years the senior housing industry has continued to evolve. From new and improved wellness programming to major advancements in health tech, the industry continues to modernize itself in the interest of a healthier and happier resident.
While we celebrate advancement in the health, happiness, and longevity among our aging population, certain subsets of senior housing communities remain in a vulnerable position. As the landscape of senior housing evolves, some older communities struggle to keep up. Some of these properties, often built decades ago, no longer meet the expectations or needs of today’s consumer. Inefficient layouts and lack of modern amenities leave them ill-equipped to compete with newer, more thoughtfully designed communities. However, rather than allowing these properties to struggle financially, there is a growing opportunity to convert them into alternative uses that serve different populations.
Most conversion candidates tend to be built before the millennium and have certain attributes that make keeping up with evolving consumer preference a challenge. That’s not to say that age or functional obsolescence is the only factor contributing to alternative uses. Some communities may have been developed in the last 10 to 15 years but missed on their underwriting assumptions and simply can’t command the rental rates needed to stand on sturdy financial ground. Others may have underwritten the rate equation correctly but missed on market demand, leaving the community poorly occupied beyond an extended period. Whatever the reason for a pivot, there are several alternative use cases investors are having tremendous success executing.
One of the more common instances of this pivot is converting senior housing communities into behavioral health or substance abuse treatment centers. The demand for mental health services has grown dramatically, yet the supply of appropriate residential treatment centers has not kept pace. Senior housing communities include features such as private or semi-private rooms, dining areas, recreation spaces, and medical infrastructure—attributes that align well with the needs of behavioral health environments. While the physical plant characteristics of senior housing communities mostly mimic the needs of behavioral health facilities, the specific zoning of the existing senior housing community typically dictates the viability of conversion.
Another growing trend in our industry is conversion to more affordable, market-rate 55+ living. Like behavioral health conversions, zoning can be an impediment, however, the change in use is marginal and generally welcomed by local municipalities and their constituents. These communities present a practical and timely solution as they have the foundational infrastructure needed for active adult housing during a time of rising costs for senior housing residents. Independent living communities work best for this adaptive reuse; however, with targeted renovations and cost-effective upgrades, assisted living communities and even skilled nursing facilities can be repositioned to serve middle-income and fixed-income older adults who are priced out of other communities. By preserving the communal and supportive elements while eliminating costly services that aren’t necessary for independent seniors, owners can offer a quality, age-restricted living option at a more accessible price point. These conversions not only extend the useful life of aging properties but also help meet the growing need for affordable, age-friendly housing solutions.
Ultimately, converting senior housing to other uses should not be looked at as a fallback, but rather an opportunity. By embracing adaptive reuse, you can breathe new life into outdated properties and support other areas of need. In doing so, you ensure these spaces continue to serve other unique populations in meaningful ways.