Is Senior Housing An Answer For Vacant Retail?

Gene Ventura of Faris Lee weighs the benefits in this EXCLUSIVE interview.
Ventura: “Long gone are the days when senior housing projects were developed in remote locations tucked away from everything.”
As e-commerce continues to alter the retail industry, owners have turned to ever more creative solutions to fill vacant properties left in the wake of this transition. Should senior housing be one of the options? That’s one of the suggestions from Gene Ventura, senior managing director at Faris Lee Investments. GlobeSt.com met with Ventura to hear more.
GlobeSt.com: Has retail been overbuilt? If so, what properties are most likely at risk?
Gene Ventura: With the recent flurry of retailer closures and less to backfill these vacant sites, it is apparent that we are overbuilt even in highly trafficked areas. According to Cowen and Company’s research analysts, the US has about 40% more shopping space per capita than Canada. Although overall retail spending continues to rise steadily the face of American shopping has changed.
GlobeSt.com: What other uses make sense?
Ventura: Innovative retail is expanding and replacing outdated product as a direct result to how consumers have changed the way they shop digitally. Companies with new digital concepts like Kendra Scott Jewelers, Warby Parker, and Nespresso are thriving. We are seeing the greatest transformation of the retail landscape in modern day history delivering experiential concepts to a demanding Millennial generation.
As we all know, location is the driving factor for retail. Malls, grocery-anchored and daily-needs centers are usually a quick drive or walk from suburban neighborhoods.  With big boxes closing and threats of major retailers going out of business, there is vacant space opening up in prime locations ready for redevelopment. This trend provides developers with an ideal opportunity to consider senior housing projects as the locational demand for this product type mirrors that of suburban retail. Long gone are the days when senior housing projects were developed in remote locations tucked away from everything!
GlobeSt.com: Why does senior housing top your alternative-use-for-retail list and how does it benefit nearby retail?
Ventura: There are a few key reasons why senior housing is an ideal solution to replace struggling big box centers or largely vacant strip malls in suburban areas:
Demographics: According to the United States Census, the total population age 65 and older is roughly 48 million which is 15% of the total population. This is up 1.6 million from 2014 and this large demographic continues to grow, and likewise, demand for senior housing grows.
Downsizing in the community: Baby Boomers originally moved to the suburbs decades ago to raise families and now want to downsize; however, they want to remain in the community they have long called home near their friends, children and grandchildren.
Amenity-rich location: They are prime sites for senior housing because they are typically near a variety of other thriving retail centers, medical services, restaurants, and array of other amenities seniors wish to be near.
Retail-friendly demographic:  A large portion of Baby Boomers have money to spend and they like to shop in stores as opposed to online. This makes for a symbiotic relationship between nearby access to senior housing and retail.
GlobeSt.com: How are you advising clients that may consider converting all of or a portion of their retail property to senior housing?
Ventura: As a firm specializing in retail, we work with a lot of owners on how best to position their retail asset and sometimes senior housing is an ideal fit.
We usually see two kinds of owners of retail property in need of help: 1) Those that have assets with a high vacancy that can’t be filled; 2) Those that have excess land, but it doesn’t make sense to develop additional retail. Either way, we advise our clients to help create a strategic plan to monetize their assets as opposed to just sitting on them and losing money. We are working on a couple projects right now that involve converting retail-zoned land into senior housing. Ultimately, these owners will see their under-performing property turn into a stable, cash-flowing asset with returns that far exceed current levels.
By: Geoffery Metz (GlobeSt)
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