Boomer Town

Senior housing finds its place in Hawaii

May, 2004

If you had asked her a year ago, Jasmine Asuncion would never have considered putting her 65-year-old mother, Constance, in a retirement home. “You always see old folks in retirement homes on TV, and they have these small, drab dorm rooms and they look so lonely,” says Asuncion. “I couldn’t do that to my mom.” That was before she found out about Kahala Nui, an upscale retirement community opening early next year. “Reading about all the services and amenities that are going to be offered at Kahala Nui really blew the lid off of any fixed ideas I might have had about retirement homes,” she says. “Now, not only does our family feel comfortable about her living independently, but mom is actually really excited, too.”

It’s not unlike locals, who have long been known for housing not just two, but often three generations under one roof, to dismiss the idea of carting one of their own off to a retirement home. Most have preconceptions of such homes as cold, isolated environments, or tend to confuse comprehensive retirement communities (which allow for active, independent living), with nursing homes, which deliver specialized services to residents in need of 24-hour care. Developers of several new retirement communities in Hawaii hope to clarify some of the misconceptions and educate the public about the importance of adequate senior housing in Hawaii, as thousands of the Islands’ first baby boomers shuffle toward retirement.

Nationwide, senior housing construction has been subsiding for several years. In 2002, only 250 senior housing projects were built, compared with 614 in 1998, according to the American Seniors Housing Association. Hawaii, however, seems to be bucking the trend. On Oahu, the number of communities either in development or on the drawing board is nearing double digits. And Maui, Kauai and the Big Island have all had senior housing projects open within the past three years, the newest of which, Kauai’s Regency at Pua Kea, opened just this month. (See sidebar on previous page).

The growth is in response to the impending demand for senior housing in the Islands in the immediate and long-term future. According to a feasibility study conducted by MW Group before it began development of the Plaza at Punchbowl retirement community, the current market for senior housing is way below projected demand. The study found that 7,056 people ages 75 years or older in Honolulu have incomes sufficient to afford assisted-living care (up to 75 percent of their disposable income). Currently, there are less than 1,000 beds available for this market. That doesn’t even include the demand by people younger than 75 years.

The recent growth of this market, in a community where children feel obligated to care for their parents, and seniors are reluctant to leave the comforts of home for new digs, means a fast learning curve for the developers, prospective residents and their families.

GEARING UP FOR THE GOLDEN YEARS

Developers of senior housing realize they can’t market to seniors en masse. As with traditional real estate developments, retirement communities are hardly one-size-fits-all. Let’s face it – with refundable entry fees mirroring the median price of a single-family home in the surrounding areas (read: $350,000 to $800,000), Kahala Nui probably isn’t for the faint of pocketbook. Even the more moderately priced Plaza at Punchbowl (monthly rents range from $2,975 to $4,750), which opened in January and targets middle-income residents, might be out of reach for boomers who didn’t plan or save wisely. And some of the developments targeting low- to moderate-income seniors offer just housing and no medical support, which might be inadequate for some people.

Generally, senior housing can be divided into four categories: independent-living, assisted-living, skilled-nursing and continuing-care retirement communities (see “Types of Senior Housing” on page 36 for detailed descriptions). Since Hawaii residents 60 years and older will represent a quarter of the population by 2020, there’s sufficient room for growth of all types of senior housing throughout the Islands. The key to success, though, will be the developers’ abilities to identify areas of opportunity. That might mean urban areas closely situated to shopping, dining and hospital facilities. Or, it may mean areas where the number of people age 45 to 65 is increasing. “Ideally, people want to retire where either they’ve lived, or where their children live,” says Mike Wood, “So you build where the people are. On Oahu, that inevitably ends up being Honolulu.”

Understanding the needs of the market will also go far in attracting residents to retirement communities. Joyce Timpson, vice chairman and vice president of the board of Kahala Senior Living Community Inc. (the development company of the $100 million Kahala Nui), says they are targeting active, affluent seniors. “The people who are moving in are quite healthy, stable and very active,” says Timpson. “In that respect, we’ve worked hard at Kahala Nui to offer services and activities that are mirrored in the community. We’ll have exercise classes and travel groups, and we even have guest speakers come to talk about interior design and real estate. We really want to establish a sense of community.”

Yet while all of Kahala Nui’s residents are capable of independent living upon entry, the campus, like many of the newer retirement communities being developed, is designed for continuing care, otherwise commonly referred to as “aging in place.” In addition to its 270 independent-living units (as of late March, 235 were reserved), Kahala Nui has 60 skilled-nursing private suites, 30 assisted-living private suites and 30 memory-support suites that residents can move into as needed.

Several retirement communities, including Plaza at Punchbowl, Kapolei-based Luana Koa and Palolo Chinese Home, are targeting residents with moderate incomes – the demographic group that most baby boomers fall into, resulting in the greatest demand for senior housing. Kenneth Chong, vice president of the development company Hawaii Village Associates, says Luana Koa, a 20-acre retirement community being built in Kapolei, was born out of need. “We have an aging population, and the demand for continuing-care facilities is just growing by leaps and bounds,” he says. “The problem now is that hospitals are functioning as long-term-care facilities, because there’s no place for elderly people to go once the hospital discharges them.”

Mike Wood, principal of MW Group, which developed Plaza at Punchbowl, concurs. He estimates that 20 percent to 45 percent of patients in nursing homes could actually be accommodated in assisted-living facilities. According to Wood, the concept for the Plaza first evolved a few years ago, when his business partner, Steve Metter, attempted to move his father to Hawaii. “Steve’s father moved into fairly serious Alzheimer’s and there just wasn’t anything here to accommodate him,” says Wood. “It’s scary, when you think about the percentages of the population that are turning 65 and older, and the fact that their options are still so limited, especially if they haven’t got major money.”

Palolo Chinese Home Chief Executive Officer Leigh-Wai Doo is so certain of the impending demand that the company is spending $20 million to renovate its 15-acre property. In 2000, Palolo Chinese Home commissioned a survey by a national consultant, and the results showed that Hawaii has a higher demand than almost any other state. Doo says that Hawaii residents tend to have a “farming community mentality,” where children are expected to look after their parents, and he says it’s led Hawaii to becoming a backwater of senior care.

THEY’RE NOT ALL NURSING HOMES

No matter what type or size of development, all retirement facilities face several consistent challenges. Financing, for example. Despite the increasing demand for senior housing, capital to fund such establishments remains tight. Many lenders aren’t familiar enough with these types of establishments, and therefore consider them less of a real estate loan and more of a business loan, which is generally considered a higher risk. On top of that, developers must demonstrate sufficient market demand, which means not just proving that x amount of seniors with x amount of dollars live in a particular area, but also determining actual demand for the communities.

And the question, “If we build it, will they come?” is one that developers have spent thousands of dollars trying to answer. Results from various feasibility studies, coupled with recent inquiries from the community to new developments and the high number of initial reservations at places such as the Plaza at Punchbowl and Kahala Nui, are encouraging. However, according to industry experts, lots more can and should be done to increase awareness and educate the community about the different types of senior housing available.

“There’s a stigma attached to traditional nursing homes, and that creates a barrier to getting people into retirement communities,” says Bart Beddoe, vice president of Regency Pacific Inc., which recently opened facilities in Kona and on Kauai. Beddoe says the experience of a continuing-care retirement community, in which the majority of residents lead active, independent lives, can really be quite different from that of a skilled nursing home. “People don’t understand it’s a beautiful apartment building with nice dining rooms, pools and spas, activities, transportation and, if required, medical assistance readily available. Once they see it’s more of a luxury environment, and less of an institutional setting, I believe it will start to catch on.”

MW Group’s Wood says that, even with all the current growth, Hawaii can stand to build out several more retirement communities over the next decade or two. In fact, he says, there’s strength in numbers, and the sheer volume of senior housing projects going up in Hawaii means a higher rate of community outreach and education. Word of mouth, after all, is the best form of advertising available. “Not everyone may be able to afford Kahala Nui, but it will get a lot of press, and that will help people understand about assisted living … that there are other options than having to live at home with the kids or moving into a nursing home,” says Wood. “We really need to get away from ‘I have an obligation to my mother or grandmother,’ because, in many cases, retirement communities offer a higher quality of life and more independence and dignity. In most cases, people actually even start looking younger.”

Casting a Wider Net
Regency Pacific Inc. brings its local-style service to the Hawaiian Islands

Oahu might be getting the bulk of new senior-housing projects, but a Mainland-based developer has bypassed the “gathering place,” opting instead to open its first two retirement-community developments on Kauai and the Big Island. Eventually, Washington-based Regency Pacific Inc., which builds and operates retirement facilities, would like to build more retirement homes throughout the state. But for now, the company is closely tracking the success of its two

independent- and assisted-living facilities, the Regency at Pua Kea on Kauai, and the Regency at Hualalai on the Big Island.

Monthly rents for both the Regency at Hualalai and the Regency at Pua Kea are considered moderate, beginning at around $2,200, and include meals, activities, utilities (except phone) and transportation. But for the most part, locals have been slow to warm to the concept of independent and assisted living. It’s been two and a half years since the Regency at Hualalai opened, and, at 65 percent full (the current tenant mix is about 65 percent local and 35 percent non-local), the facility is currently experiencing its highest occupancy rate yet. Jean Nagle, general manager of the Regency at Hualalai, says it’s because locals haven’t been exposed to and aren’t aware of everything these communities have to offer.

However, she is optimistic, and expects to be “darn near full” within the next year. Over on Kauai, executives at the Regency at Pua Kea remain confident as well. General manager Karen Davis had anticipated filling just 12 of 82 units upon opening the Puhi-based, assisted-living facility this month, but, as of late March, 20 apartments had been reserved.

Regency Pacific Inc. has senior-housing projects in five states, yet is mindful of Hawaii residents’ unique needs. “At our nursing home on Kauai (Regency Pacific manages the Kauai Care Center in Waimea), we learned that, though we are serving the same age group, cultural sensitivities and needs are different and need to be observed – meat and potatoes on Mainland menus translate to shoyu chicken and rice in Hawaii,” says chief executive officer Jim Clay, on the company’s Web site.

According to Regency Pacific Vice President Bart Beddoe, the company’s strategy is to offer high-quality accommodations in locations in which locals want to live, and at prices they can afford. Eventually, it would like to have a greater presence in Hawaii, particularly on the Neighbor Islands (Regency Pacific has an option for an additional 15 acres on Grove Farm property, neighboring the Regency at Pua Kea), although it hasn’t ruled out Oahu. Says Beddoe: “Obviously, Oahu has the greatest need for retirement communities, but it’s also got several new projects going on right now, so how the market responds to them is something we’re obviously watching closely.” -JLY

 

Maturing Market

There used to be a time when helping an elderly person cross a street was simply good manners. Nowadays, providing assistance for seniors is an entire industry in itself. From small chores (yard keeping and grocery shopping) to highly involved services, such as personal and health care, companies across America are targeting the senior market in hopes of snatching a chunk of the $1.6 trillion in disposable income controlled by consumers age 50 and over.

Hawaii is no exception. Several local companies are preparing for the graying of Hawaii’s baby boomers, by creating services and products specifically for them – the most active and highest spending generation in American history. But that’s not to say these people are in it just for the big bucks. Most local businessowners who find themselves building businesses to support the elderly do so out of compassion and benevolence, or merely to fill an unmet need.

Take Kokua Care, for example. The company was formed early this year when its owner decided he wanted to give back to the community by starting an in-home caregiving business. Not wanting to waste any time, the company bought the Hawaii franchise rights for an already established national company, Homewatch Caregivers International, and Maurie Feldberg was hired to get the company going.

“We were looking for a company that showed a lot of integrity and whose owners had the desire to make a difference,” says Feldberg, senior vice president of Kokua Care, which provides personal care, companionship, minor medical, respite and hospice care at prices ranging from $14 to $17 per hour. In April, the company formed another business to complement Kokua Care. “We’re starting Kokua Care Handy Pro, which is a very affordable and reliable handyman service,” says Feldberg. “So often we see seniors being exploited, so this is one more area in which we can hopefully prevent that from happening.”

Another company expanding its senior services is the 108-year-old nonprofit Palolo Chinese Home. On top of a $20-million facility renovation to better provide for its on-campus residents, Palolo Chinese Home is gearing up to begin off-campus care in June. “We’re going to coordinate any service that an elder person wishes to be provided to them in their own home, whether that’s meal service or personal assistance,” says Leigh-Wai Doo, chief executive officer of Palolo Chinese Home. Doo says it’s a novel concept, but, often times, seniors simply don’t know where to turn for help.

That’s exactly why Kevin Sypniewski started his Internet company, Assistguide.com, despite heavy initial skepticism from his peers. When Sypniewski started Assistguide six years ago, most college students hadn’t even gotten the hang of the Internet yet, let alone the elderly population. But he firmly believed that the Internet was going to be the answer to what he saw as the biggest problem in the long-term-care industry, a lack of education and awareness. His concept was simple: create a Web site where consumers in need of long-term care and disability information could easily search for business providers, state government agencies and nonprofit organizations.

“Never mind that my friends were telling me that seniors don’t surf the Web,” he says. “Long-term care is a team sport. Their kids are online, their case managers and social workers are on the Internet. So it doesn’t matter if they’re not.” His doggedness paid off. Although Assistguide no longer discloses sales, in 2001, Sypniewski told Hawaii Business the company could be making $100 million in gross sales in five years. He says that’s still entirely possible, and, furthermore, he intends on taking the company public in the next three to five years.

“Obviously we’ve proven that this is a huge market” says Sypniewski. “And the opportunities are only going to increase the further we go down the road.” -JLY

 

Types of Senior Housing

INDEPENDENT LIVING

Quite literally, “independent” living units (often referred to as senior apartments) are designed for seniors who lead active, independent lifestyles. These communities are for people who are capable of living on their own, but prefer the conveniences and opportunities of communal living. Services often include recreational, educational and social activities, and some amenities are swimming pools, spas, libraries and lounges. Laundry facilities, light housekeeping, meals and transportation services may also be provided.

ASSISTED LIVING

Assisted-living communities are similar to independent living communities, with the added assistance of personalized services and health care. Unlike nursing homes, assisted-living facilities do not provide 24-hour nursing care. They are designed for individuals who are still independent, but need a little help with daily tasks. Most assisted-living facilities provide assistance with grooming, bathing and other daily activities. Most plans include meals and laundry service.

SKILLED NURSING

Otherwise known as nursing homes, skilled-nursing facilities are designed for seniors who need continuous, round-the-clock care. These facilities provide many of the same services as independent and assisted-living communities, including housing, personal care and activities coordination, and, in addition, skilled nursing care on an extended basis and regular rehabilitation services. The onsite medical staff generally consists of registered nurses, licensed practical nurses and nurses’ aides. Nursing homes are licensed and regulated by the state Department of Health.

CONTINUING-CARE RETIREMENT COMMUNITIES (CCRC)

CCRCs provide a full continuum of care for residents, so that they may transition seamlessly from independent living to assisted living, then skilled nursing, and, in some cases, Alzheimer’s and dementia care. These residential campuses are designed so that seniors may “age in place.” Most CCRC units are purchased and require entrance fees, although a few in Hawaii are designed to be rentals.

ALZHEIMER’S AND DEMENTIA CARE

Many senior housing facilities offer services for residents with Alzheimer’s disease and dementia. However, there are also facilities that provide customized care for people with memory disorders. These facilities provide an environment that helps curb confusion and anxiety for seniors with memory impairments. There are currently no stand-alone Alzheimer’s facilities in Hawaii. -JLY

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