How Covid-19 Could Remake Mixed-Use Senior Living Development

Over the past decade, mixed-use communities became a popular living arrangement for seniors — thus making it an attractive development opportunity. But the Covid-19 pandemic threatens to change the equations that made that product work, while presenting opportunities for those who see how mixed-use might change in the new normal.

While the pandemic is deadly across age groups, people who are immunocompromised are at a far greater risk of severe health damage, hospitalization or death. Seniors in particular are at risk: according to data from the CDC through April 20, 91% of all Covid-19 deaths between February 1 and April 18 were people over the age of 55, a mark a bit higher than the 88% death rate for seniors dying of all other causes.

Seniors are also at greater risk due to the falling stock market and real estate markets, as retirement savings and house sales typically fund a move into senior housing, whether for a community entrance fee, monthly rent or a new house in active adult.

All of these factors change how and when older adults enter senior housing. This could put the brakes on several senior housing trends, but of all of them, I think mixed-use will be hit the hardest by the new normal of Covid-19 — and face the greatest transformation.

That’s because the very reasons the product thrived — satisfying the needs of three stakeholders: the operator, the city and the resident — seem to be the very reasons that in the near future, those parties might be inclined to to stay away.

The heart of the appeal of mixed-use is the mixed-use element — typically ground-floor retail space such as a restaurant or grocery store. There are also more creative options, such as gyms, libraries, theaters or hospitals.

Operators and developers used that mixed-use element as a selling point to drive move-ins. Easy access to these businesses met the rising consumer demand for walkable communities, and gave residents a natural way to interact with people outside the community to build a deeper social life.

For the residents, access to these businesses and the people who frequent them was attractive. Municipalities liked these developments for the economic activity they brought into the community — the mixed-use collaboration with the senior living operator helps the municipality meet various community needs — combined with the low strain that seniors place on roads, parking and schools.

But the inherent risks of mixed-use for each of these three stakeholders will be felt even more acutely as detriments to this development in the age of the Covid-19 pandemic.

Owner/operators were already taking a risk with mixed-use because along with the standard challenges of new construction and running a community, they in some cases were taking on the added risk of being retail landlords. If they couldn’t fill those spaces they were running at a loss.

In a downward economy where gyms are closed, grocery shopping is handled by delivery services and restaurants are struggling to stay afloat, operators are disincentivized to go the mixed-use route.

Residents are also disincentivized to move into these communities because they need to be hyper-vigilant about their human contact. This won’t end when governors and mayors lift shelter-in-place orders — older adults will have to remain socially responsible long after younger people are attempting to resume life.

Meanwhile, neighboring citizens outside the senior community will be hyper-focused on being part of the safety solution for seniors, and will likely take steps to avoid putting the seniors in their lives at greater risk than is necessary. I can see a world where younger people are more careful than ever around seniors, and would therefore be unlikely to frequent restaurants, grocery stores, gyms, theaters, libraries or any other shared space in a mixed-use senior community.

How the pandemic will change mixed-use senior living is yet to be seen, though it seems that in the near term, the risks outweigh the rewards. Going beyond that, the specific risks that older adults face with Covid-19 seem to negate the specific rewards of mixed-use senior living. As society slinks back toward normal social interactions, the three stakeholders that drove the mixed-use senior living boom might change their habits around the product.

For instance, there might be a greater focus on businesses that facilitate a degree of social distancing and faster-paced use — like grocery stores or pharmacies — and a shift away from those that depend on greater interaction or longer use times, such as restaurants, coffee shops, libraries or gyms.

The social drivers that made mixed-use senior housing popular — the desire for human connection and multi-faceted construction — will likely remain. The execution will have to change. How operators make these adjustments will guide the next phase of mixed-use senior living.

Jack Silverstein is the author of the SHN report “Strategies For Mixed-Use Development in Senior Living.”

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