This week, NIC released a white paper on the active adult rental property type to give potential investors valuable information about this emerging segment’s characteristics and potential residents.
The paper establishes a definition for the active adult rental property segment which is needed to help bring common understanding to and insights on the growing opportunity. Defining the property type offers basic guideposts around what the segment is—and is not.
What are active adult rental properties? NIC defines the active adult segment as follows.
Active adult rental properties are age-eligible, market rate, multifamily properties that are lifestyle focused; general operations do not provide meals.
These properties aim to provide independence coupled with opportunities for social engagement that reflect the active lifestyle of their tenants. Clearly defining the segment will enable better data collection on the growth and performance of the sector, which supports the transparency investors need and ultimately provides greater access and choice for older adults.
In creating the definition, NIC considered several criteria to support clarifying this segment:
- Age-eligible: The property must restrict residents based on age. This typically means at least one resident in the household must be 55+, 62+, or 65+, depending on the local governing jurisdiction.
- Majority market rate: NIC excludes low-income housing tax credit properties from the definition.
- Multifamily: Single-family, home-only communities (SFH) are excluded. Similar to the housing data collection, it would, however, include data on attached or detached SFHs within communities with majority multifamily dwellings.
- Rental properties: The definition excludes for-sale properties.
- Meals not included through property operations or base rent: The definition does not include properties that provide lunch or dinner or allowances/credits for meals. Active adult rental properties may, however, offer meals such as continental breakfasts or happy hours.
- Not a static definition: This property type, and NIC’s definition of it, is expected to evolve as the segment matures.
Millions of baby boomers who will soon need to consider their housing options, and a growing number of people with lower acuity health needs prefer an active, community-based lifestyle lived alongside generational peers. If the senior housing community is to adequately provide access and choice for these seniors, better data to enable more transparency is desperately needed.
This white paper, “Active Adult Rental Properties: Defining the Emerging Property Type,” represents an initial step forward. Data collection is still in its nascent stages. With our new definition, however, NIC MAP Vision is collecting segment-specific data allowing potential investors and other market stakeholder to access data on the characteristics and financial performance of more than 200 active adult properties across the country. NIC MAP Vision is expected to provide more robust data, including operational performance and additional property coverage, by early 2023.
The Active Adult white paper on this emerging property type is available for download on our site.