Bay Area project highlights growing demand for luxury senior housing
According to Rachel Scheier at CoStar News, "Harbert Management Corp. is poised to break ground on a luxury senior living facility in the Bay Area town of Dublin as the firm doubles down on a growing property type.
The Birmingham, Alabama-based asset management firm announced that it had nailed down financing for The Whitford of Dublin, an upscale, 140-unit rental facility for seniors at 5751 Arnold Boulevard that’s scheduled for completion in 2026, “the year the first wave of Baby Boomers turn 80,” wrote Harbert in a press release.
The approximately 73 million Americans born after World War II, between 1946 to 1964, are expected to reach 65 by 2030, according to the U.S. Census. Senior living facilities are poised for increased demand over the next 10 years as the baby boomer population ages and retires. The United States saw a slowdown in senior housing construction after the onset of the COVID-19 pandemic, which has spurred an even bigger surge in interest since, according to CoStar.
Anticipating a growing call for high-end rentals for well-heeled retirees, Harbert in 2021 acquired South Bay Partners, a Dallas, Texas-based developer that specializes in the sector. The firm — now a subsidiary of Harbert — has developed 83 senior living projects in 15 states since it was founded in 1994, focusing its efforts in recent years on “ultra-luxury” facilities in “affluent zip codes."
Other projects in the works in California include The James, a 350-unit development in Irvine, and The Seville of San Clemente, an 87-unit facility that was recently completed in that Southern California beach town.
“The fundamentals in seniors housing continue to show both improvement and overall strength,” said South Bay CEO Patrick McGonigle in a statement, adding that leasing and rental rates at such projects have exceeded the firm’s projections. “While the capital markets are slowly unthawing as interest rates return to a stable level, we feel that the time is particularly ripe to execute on new development opportunities.”
The Whitford, a two-story facility on an approximately 157,000-square-foot parcel in this suburb about 35 miles east of San Francisco, will have 102 assisted living units and 38 for memory care, said Harbert. It plans to offer luxury amenities such as an indoor pool, a gym and a yoga studio, a hair salon, media lounges and multiple dining options.
The developer said it partnered with Live Oak Bank, Nuveen Green Capital and Harbert Seniors Housing Fund II on the development. Momentum Senior Living will serve as operator for the facility."
Luxury senior housing, like the upcoming Whitford of Dublin, represents a significant shift in how senior living facilities are designed and perceived. Moving away from the traditional convalescent hospital model, these developments emphasize a "resort-style" experience, featuring high-end amenities such as indoor pools, yoga studios, and fine dining options. This evolution can have notable implications for property taxes in communities where such facilities are developed.
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1. Increased Property Tax Revenue
Luxury senior housing developments are often built in affluent areas with high land values, and their construction represents significant capital investments. For example, the Whitford, with 140 upscale units and extensive luxury amenities, will likely be assessed at a high property value. This results in increased property tax revenue for the local municipality. The higher tax base can provide additional funding for public services, infrastructure, and community programs, benefiting residents.
2. Shifts in Tax Allocation
Luxury facilities often cater to wealthy retirees, potentially increasing the demand for services tailored to an older population, such as public transportation for seniors or enhanced medical response teams. While these developments generate significant tax revenue, municipalities may need to allocate more funds toward meeting these demographic-specific needs.
3. Community Concerns and Economic Equity
As luxury senior housing becomes more common, some residents might express concerns about the potential for increased property taxes to affect surrounding areas. These developments could raise the overall property values in their vicinity, which may be a double-edged sword. While increased property values can enhance equity for homeowners, they may also place a financial strain on long-time residents not benefiting directly from these facilities.
4. Economic Multiplier Effect
The shift to resort-style senior living also stimulates local economies through job creation during both construction and operation. From construction workers to healthcare providers and hospitality staff, these facilities can drive economic activity. This, in turn, supports broader economic growth, potentially increasing local tax revenue beyond property taxes.
5. Policy Considerations
To balance the benefits and challenges, local governments may explore policies like tax incentives for affordable housing developments alongside luxury projects. They may also consider zoning ordinances or impact fees to ensure that luxury senior living facilities contribute to the community without disproportionately affecting long-term residents.
By moving toward a resort-style model, luxury senior housing developments like the Whitford demonstrate an evolving market that aligns with the preferences of aging Baby Boomers. While these projects promise economic benefits and increased property tax revenue, they also require thoughtful planning to manage their broader impact on local communities.