CCRCs expected to experience big boom with incoming baby boomers

Continuing care retirement communities (CCRCs) are poised to attract a wide swath of older adults over the next decade, but that doesn’t mean there won’t be challenges or changes to the business model along the way, according to Senior Housing News.

For CCRCs—which are also commonly known as life plan communities—the near-term and long-term forecasts look good. Tailwinds include a strong economy; a static, 91% average national occupancy rate; rent growth outpacing other kinds of senior housing; and limited new supply in some markets, according to a new CCRC report from commercial real estate services and investment firm CBRE (NYSE: CBG).

Overall, the senior housing type is well-positioned to attract baby boomers as they start to move into retirement communities en masse by the mid-2020s, according to Jeanette Rice, Americas head of multifamily research at CBRE.

“The near-term outlook is good, and the longer term outlook is very good, as well,” Rice told Senior Housing News. “You have demographics that are starting to kick in for senior housing.”

However, the product type will still have to grapple with an evolving pricing structure and a changing care continuum in the future, among other challenges.

Though the so-called modern-era of CCRCs first arose more than three decades ago, owners and operators in the space still haven’t quite figured out the best way to charge their residents.

The most common type of CCRC pricing is the “Type A,” or “life care” model, where residents pay an entrance deposit and other mostly static monthly fees to get a practically unlimited amount of care as they age. Usually, at least part of that deposit is reimbursed after a resident moves out or dies. Other pricing models with entrance deposits include “Type B” structures, where residents can pre-pay future assisted living and nursing care costs; and “Type C” structures, where residents pay different fees depending on the services they receive.

Read the full story at Senior Housing News.

The average entrance fee for CCRCs in the U.S. is $329,900, according to CBRE research and data from the National Investment Center for Seniors Housing & Care (NIC). Nearly two-thirds of the 1,153 CCRCs tracked by NIC use an entrance fee pricing structure.

Topics: Housing , Uncategorized