A burst of development of assisted-living centers will add nearly 400 living units to the Colorado Springs market by mid-2014, driven by a growing number of aging baby boomers, an improving local housing market and waiting lists at many existing facilities.
The six centers — five planned and one already open — are mostly targeted at affluent elderly residents on the north side of Colorado Springs and will expand the city’s inventory of assisted-living units by more than 25 percent. The construction boom began in mid-2011, when the local occupancy rate at such centers rose to 91.2 percent from a low of 73.4 percent two years earlier, according to the National Investment Center for the Seniors Housing & Care Industry in Annapolis, Md.
“These new properties represent a pretty large increase in inventory and will put downward pressure on occupancy rates in all properties as they open, but the industry has shown the ability to recover fairly quickly,” said Chris McGraw, a senior research analyst with the center.Assisted-living centers are housing complexes targeted at older and disabled adults who need help with preparing meals, keeping track of medication, bathing, dressing and other personal care tasks, but don’t need the 24-hour medical services provided in a traditional nursing home. More than 50 such centers operate in the Springs, according to some estimates, though the National Investment Center only tracks the 14 largest centers that offer more than 1,000 units, which are typically leased on a monthly basis to residents.
Two of the projects are targeted entirely at residents with Alzheimer’s disease, dementia or other memory impairments, and three others include memory-care units. Such facilities have secure entrances and outdoor areas so residents cannot leave the facility and become lost, and offer similar services to assisted-living centers.
“When you look at the dementia or memory care market, there is a need for that everywhere in the country,” said Dave Daumit, founder and CEO of Scottsdale, Ariz.-based New Dawn Memory Care, which is planning a 48-unit memory care center in the Briargate area.
Several of the projects now under way were planned before the 2008 financial crisis, but shelved as financing dried up and the pool of potential residents was reduced because seniors who needed to sell homes before they moved into such centers couldn’t find buyers, said Elisabeth Borden, principal of The Highland Group, a Boulder-based consulting firm for the senior-housing industry who has worked with developers of several of the local projects. Development has resumed as the housing market and financing climate has improved, she said.
MorningStar Senior Living, Bonaventure Senior Living and New Dawn Memory Care all acquired sites in the Springs for their projects before the financial crisis, but delayed them as a result of financing difficulties and concerns that potential residents wouldn’t be able to sell their homes.
“There is a bit of pent-up demand because construction in this industry stopped for three years,” Borden said. “As the market has returned, there is more interest in assisted living and memory care than other types of senior housing because they are more need-based.
Residents of those types of facilities have more of a need to make an immediate move.”Borden said the recent spate of development follows an improving market for acquisition of senior housing projects in which real estate investment trusts and other groups have bid up prices for projects that had moved beyond the startup phase and attracted enough residents to be profitable. And the burst of construction in the Springs may not be over when the six projects are completed — Borden said she is aware of at least two other development groups that are looking for sites in the Springs for potential projects.
The population of adults 75 years and older in El Paso County is projected to grow 16 percent between 2010 and 2015 and another 23 percent between 2015 and 2020, said Mike Dailey, president of Millennium Venture Group, a Denver-based real estate development and investment firm, said in a press release. Millennium is a partner in MorningStar at Mountain Shadows, an assisted-living center under construction in northwest Colorado Springs.
Scott Bartlett, lead long-term care ombudsman for the Area Agency on Aging of the Pikes Peak Area Council of Governments, said there is demand for new assisted-living centers, in part because of federal rules that require nursing homes to ask residents if they want to live in “less restrictive” facilities.
“The emphasis has been to get people out of nursing homes into less restrictive environments as long as they can be safely cared for. The average assisted-living center costs about $2,500 to $3,000 a month, compared with $7,000 a month for nursing home care,” Bartlett said.
The first new assisted-living project — Point of the Pines Gardens — opened in August and has filled quickly, reaching 90 percent occupancy within five months, said Matt Coffman, chief operating officer of Pueblo-based Accolade Living Centers, which operates the center. The project targets a different market from the other five centers since it is financed by investors who receive federal income tax credits for providing housing for low- and moderate-income seniors; it is the only one of the six centers that accepts payment from the federal Medicaid program.
“We aren’t overbuilding the market; we anticipate that the population that needs assisted living in Colorado will double during the next 10 years,” Coffman said. “There are waiting lists at several properties now and we expect to fill our facility by March. The demand for this facility was so great that we just finished another 10 units in our facility. We are looking for other potential sites in Colorado Springs, though we would have to apply to and be approved by the Colorado Housing and Finance Authority for tax credits for that site before we could start construction.”
Bonaventure Senior Housing, developers of a project in the Briargate area, aren’t concerned about the flurry of senior housing construction, said Ben Settecase, development director for the Salem, Ore.-based company, which operates 37 similar properties in Castle Rock, Idaho, Montana, Nevada, Oregon and Washington. Most are designed as “continuing care communities,” where seniors can move from apartments where they have housekeeping and some meal service to assisted living or a special unit for those with memory impairment.
NEW AND PLANNED ASSISTED-LIVING PROJECTS IN THE SPRINGS AREA
• Point of the Pines GardensDeveloper or owner: Point of the Pines Gardens LLC, managed by Accolade Livings Centers of PuebloAddress: 330 Elkton DriveNumber of units: 110 assisted livingCost: $8.5 millionEmployees: 40Status: Opened August 2012
• MorningStar at Mountain ShadowsDeveloper or owner: Joint venture of MorningStar Senior Living LLC and Millennium Venture Group, both of Denver.Address: 5355 Centennial Blvd.Number of units: 45 assisted living, 19 memory careCost: $13 millionEmployees: 60Status: Began construction in OctoberOpening: August or September
• New Dawn Memory CareDeveloper or owner: New Dawn Memory Care of Scottsdale, Ariz.Address: 4145 Briargate ParkwayNumber of units: 48 memory careCost: $10 millionEmployees: 70Status: Applied for building permit, expect to begin construction by end of FebruaryOpening: November
• Bonaventure Senior LivingDeveloper or owner: Bonaventure Senior Living of Salem, Ore.Address: 9112 Grand Cordera ParkwayNumber of units: 80 independent living, 52 assisted living, 17 memory careCost: Not disclosed, but building permit values project at $15 millionEmployees: 44-55Status: Began construction in NovemberOpening: January 2014
• MorningStar at Bear CreekDeveloper or owner: MorningStar Senior Living LLC of DenverAddress: Lower Gold Camp RoadNumber of units: 48 memory careCost: $9 millionEmployees: 40Status: Plans to begin construction this fallOpening: May 2014
• Beacon Lite Assisted LivingDeveloper or owner: The Encore Partners LLC of GlendaleAddress: 55 Beacon Lite Road, MonumentNumber of units: 44 assisted living, 13 memory careCost: $10 millionEmployees: 25-30Status: Seeking development approval from Monument Board of Trustees, construction to begin in summer 2013 or 2014Opening: Spring 2014 or 2015
—Staff writer Ned Hunter contributedto this report.Contact Wayne Heilman: 636-0234Twitter @wayneheilmanFacebook Wayne Heilman