Senior Apartment Activity Brisk in Southern California

By Annie Gerard and Joyce Hummel
Apt Market Research, Costa Mesa, CA

Southern California is a hotbed for senior apartments, with several dozen age-restricted apartment communities[1] running the gamut from deeply affordable to luxury currently under construction in the region. Apt Market Research identified 33 projects, totaling 3,695 units, in the five-county “Los Angeles Basin” as of Second Quarter 2006. Nearly 10,000 more units in 92 planned or proposed senior apartment projects are in various stages of pre-development. In all, under construction/planned/proposed senior apartment projects represent the potential addition of nearly 14,000 units of new supply over the next two to three years. 

Los Angeles County accounts for the lion’s share of senior apartment projects now under construction, with 17 projects (1,657 units) comprising 45% of all 3,695 units under construction. Riverside County, with five projects (822 units), is in second place, and San Diego County in third (five projects, 480 units). Orange County (three, 350 units) and San Bernardino County (three, 386 units) trail the other Southern California counties in construction activity.

Exactly half of the Southern California senior apartment units now under construction are market-rate and half are affordable, although the number of affordable projects is considerably higher (23 affordable projects vs. 10 market-rate projects). This relates to the larger scale of market-rate projects, which have a mean size of 184 units vs. a mean of just 82 units for income-restricted projects now under construction. Most of the 24 affordable projects are financed with tax credits and/or Bonds; HUD 202 projects comprise less than 300 units of pending new supply – just 15% of all affordable units under construction. Funding reductions for HUD 202 development are likely to result in even lower levels of HUD 202 activity in 2007/2008.

The 10 market-rate projects under construction (1,838 units) include four projects in Los Angeles County (628 units), three in Riverside County (675 units), and one each in Orange, San Diego and San Bernardino counties. 

Developers of market-rate senior projects presently under construction in Southern California include Kisco Senior Living, FountainGlen Properties LP, G Companies, Comfort Construction, and Star Senior Communities. Dominant affordable developers (based on units now under construction) include non-profits SCHDC, McCormack Baron, TELACU, and Mercy Housing and for-profit developers Simpson Housing Solutions LLC, Meta Housing, and The Related Companies of California.

[1] Typically restricted to residents 55 or 62+, senior apartments’ draw is a low-maintenance lifestyle and, in the case of affordable projects, below market rents; no meals or supportive services are provided.  The average age at move-in in Southern California is 71.

Costa Mesa, CA-based Apt Market Research provides research and consulting services on all types of apartment development. Partners Annie Gerard, CRE, and Joyce Hummel analyze new construction and acquisition/rehab opportunities for market rate and affordable senior apartments, conventional rental properties, “family” tax credit, in-fill, and Title 2 preservation deals in markets throughout the Southwest.  Senior (55+) apartments have been a specialty since the mid 1980s, now accounting for nearly half of the company’s workload. Gerard can be reached at agerard@aptmarketresearch.com or 714-668-9600 x222. Or visit www.aptmarketresearch.com for more information.

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