Active Adult Inventory and Penetration Rates

Active adult rental properties serve older Americans who wish to live in a multifamily setting with other residents who generally are more independent and active than the residents in today’s senior housing offerings. NIC MAP Vision recently released inventory data for active adult  for the fourth quarter of 2022. The analysis presented in this blog post aggregates the inventory and demographics of these active adult communities by market; calculates penetration rates within each market; and identifies where the largest concentration of inventory is located. Note that this analysis simply evaluates the supply side of the active adult market given the availability of inventory data. NIC MAP Vision is scheduled to release performance data such as occupancy and rents later in 2023, which should provide further insight into active adult demand.

How Much Inventory Exists?

NIC MAP Vision tracked 625 active adult properties totaling 87,763 units, as of the fourth quarter of 2022. By geographic location, 345 properties (55% of inventory) comprised of 53,396 units (61% of inventory) are located within the 31 Primary Markets tracked by NIC MAP Vision; 182 properties (29%) comprised of 23,706 units (27%) are located within the Secondary Markets (metro markets 32 to 99); while the remaining 98 properties (16%) comprised of 10,661 units (12%) are located in other markets.

Active Adult Inventory by Number of Properties and Units | All Markets | 4Q 2022

Source: NIC MAP^® Data, powered by NIC MAP Vision

Looking at individual markets, Dallas is the largest market by unit count (6,448), followed by New York (4,568) and Los Angeles (4,411). Eight of the ten largest active adult markets are within the 31 Primary Markets tracked by NIC MAP Vision, while Buffalo, NY (2,965 units) and Austin, TX (2,747 units) are Secondary Markets.

Largest 10 Active Adult Markets by Number of Units | All Markets | 4Q 2022

Source: National Investment Center for Seniors Housing and Care (NIC) and NIC MAP^® Data, powered by NIC MAP Vision  

Largest 10 Active Adult Markets by Percent of Inventory | All Markets | 4Q 2022

Source: National Investment Center for Seniors Housing and Care (NIC) and NIC MAP^® Data, powered by NIC MAP Vision  

Penetration Rates

Penetration rates are a comparison of housing inventory for older adults within a market to that market’s cohort of older adults. High penetration rates can be positive indicators of product acceptance and operator success and/or negative indicators of elevated competition. This rate can be calculated in a few ways. For senior housing, which is comprised of Majority Independent Living and Majority Assisted Living, NIC traditionally has used total inventory as the numerator and households age 75 and older as the denominator. 

For this analysis, we use active adult inventory in units as the numerator. An alternative method is to use occupied units as the numerator as opposed to total inventory, but as noted above, occupancy data is not yet available. This alternative calculation may prove useful once available, and likely no single method is perfect. For the denominator: 

• First, we use households age 65 and older (rather than 75 and older) to better capture the demographic make-up of active adult communities in which residents are age-eligible beginning at, for example, 55+, 62+, or 65+ years old, with an average resident age of 72-74 years old.
• Second, we calculate an additional penetration rate using population age 65 and older (rather than households), which results in a larger denominator and, thus, a smaller penetration rate. 
  Utilizing these two methods, penetration rates appear quite small for the active adult market, ranging from 0.1% to 0.4%. This compares to the 10.9% to 11.7% range for senior housing penetration rates across market classes. 

Penetration Rates by Property Type and Market Class | 4Q 2022

Source: National Investment Center for Seniors Housing and Care (NIC) and NIC MAP^® Data, powered by NIC MAP Vision  

When ranking individual markets, the highest 20 markets have penetration rates that range from 0.5% in Corning, NY to 2.1% in Dover, DE. Within these markets that comprise the 20 highest penetration rates:

• Primary Markets include Las Vegas, San Diego, and Dallas
• Secondary Markets include Buffalo, NY and Austin, TX

20 Highest Active Adult Penetration Rates | All Markets | 4Q 2022
 

Conclusion

The active adult property type is garnering increased interest from developers, operators, investors, and older adults due to the unique preferences of the baby boomer generation. While some markets contain active adult inventory in the thousands of units, the very low penetration rate relative to traditional senior housing indicates that the active adult product type is still in its nascent stages. Overall, the large number of households and population age 65 and older is significant and growing, and when compared to existing inventory, penetration rates also likely indicate that there is room for new active adult supply from those vying to enter the space.