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Case Study: Senior Apartments

Fountainglen @ Santa Clarita and Valencia, CA

Although seniors living in the Santa Clarita Valley remained under-served by existing age-restricted communities, construction lender Union Bank wanted to ensure there was a large enough market for two new projects by market leader FountainGlen Properties before committing to the projects.

Located in the master-planned communities of Stevenson Ranch and Valencia in Southern California, the two subject sites are well positioned to take advantage of an existing and burgeoning over-55 population. For this analysis, our consultants focused mostly on the demand for age-restricted housing by reviewing two primary market segments: (a) the current and future senior population with incomes capable of paying market-rate rents; and (b) the current and future population between 35 and 55 who would prefer to move aging parents close to them.

In addition, because recent surveys had shown that up to 35 percent of potential renters at age-restricted rentals were homeowners, the team was able to quantify an existing pent-up demand throughout the Santa Clarita Valley that was many times higher than what the two new projects would supply.

For the state of the current rental market, the firm's own primary research found 100 percent occupancy at local age-restricted apartments in addition to low vacancy rates at traditional market-rate apartments despite steadily increasing rents and new supply over the last few years. Moreover, a review of newer, high-amenity age-restricted projects comparable to the subject sites throughout Southern California showed its unit mix and rental rate structure to be realistic enough to allow a quick absorption. Finally, a dearth of age-restricted, market-rate rental projects proposed for development ultimately concluded that the projects would successfully address a specific need.

Both properties were funded, built and are currently open for business.

    
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