Numerous national and industry media have highlighted the rapidly growing opportunity represented by university retirement communities for academic institutions, including examples of communities at major universities.
A new certification program is bringing needed structure to the evolving sector by recognizing those documenting the highest level of programmatic, operational and cultural integration with a university or college.
So, is a university retirement community right for your academic institution? Based on both successful and unsuccessful projects since the mid-90s, here’s three imperatives every university or college can follow in pursuit of the answer:
1. Recognize the opportunity
The more than 85 university retirement communities that can be found through the search directory on the website UniversityRetirementCommunities.com represent only a fraction of potential growth among more than 2,600 four-year academic institutions nationwide, with international interest now also growing.
Investors have noticed, as university retirement communities routinely exceed traditional benchmarks for pre-opening lease-up and post opening time to stabilized occupancy.
Opportunities for intergenerational engagement by residents and hands-on learning for students across a range of careers related to healthcare, aging services, hospitality, business, and technology, among other degrees, abound.
Land-lease, naming rights, and contract management of healthcare or other services can offer multi-million dollar per year revenue opportunity for an academic host, and a unique positioning opportunity for senior living providers in an otherwise increasingly “Sea of sameness” sector.
2. But don’t rush in
As significant an opportunity as they may offer, university retirement communities represent, by far, the most complex residential model. They require a blend of academic institutions with a focus on 18-20-year olds and senior living providers with a focus on older adults, on what can represent a fifty to even 100+ year commitment.
Before taking the plunge, every academic institution should do its homework to not only understand what they may be getting into, but whether a university retirement community represents the best strategic fit for their institution.
What is the history and what are the demand drivers behind the model? What are the benefits (which are many) but also the risks (which need to be avoided)? What are examples of the best current university retirement communities, including their partnership structure? Where were the failures, and why did they fail?
Internally, how large (and loyal) is your alumni base? How strong is your brand? What amenities and engagement opportunities do you possess?
Is there a location proximate enough to campus to foster connections between university retirement community residents and students? Should you hold a financial stake in a business that includes providing for not only the housing but care of older adults?
Externally, is there sufficient current or future demand for senior living in the primary and secondary service area? An existing senior living community with strong (or weak) connections to the university? How do the financial benefits of hosting a university retirement community compare to alternative external opportunities that may represent an option?
Over more than 20 years of defining and working within the university retirement community sector, I developed a 21-point rubric to assess potential for an academic institution.
Those scoring 17-21 points can represent a “very attractive” opportunity, those scoring 12-16 may be viewed as “attractive”, and those scoring 6-11 as “potentially attractive,” with additional assessment required. But those scoring 5 points or fewer are likely “unattractive,” for any number of reasons, and years of lost time and significant expense can be avoided by recognizing this lack of fit upfront.
3. Finding the right partner matters
As imperative the need to understand what you may be getting into, is aligning with the right senior living partner for any opportunity determined to exist. As with any new and growing sector, it’s not just academic institutions looking for a business opportunity, and there can be a large difference between senior living developers and operators with a proven track record, and those just jumping into the fray.
University retirement communities are reinventing living options for a baby boomer generation representing the most highly educated retirement demographic in history, let alone one that controls 70% of the nation’s wealth.
With more than 10,000 of more than 70 million boomers turning 65 each day, and a future of not only fewer, but a smaller percentage of 18-year olds entering college post high school, university retirement communities can represent a significant opportunity at which academic institutions may have an obligation to at least take a look.
But in a new and still evolving sector, education and careful planning will always represent the best path to success.
