Building for Boomers Is Seen as a Growth Market

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Baby Boomers aren’t about to be their parents’ retirees
By John Handley

Chicago Tribune

RISMEDIA, June 4-(KRT) - Don’t call them seniors.

Baby Boomers, who reveled in the culture of youth a quarter century ago, aren’t about to be their parents’ retirees.

“Baby Boomers think they never will get old,” said Myril Axelrod, president of Marketing Directions Associates in New York. “This self-image will have a lot to do with their future housing choices.”

“Aging Boomers are not considering retirement housing. Instead, they call it next-stage housing,” said Axelrod, who spoke at a recent senior housing symposium in Chicago.

And, though home builders are gearing up to satisfy the needs of the 30 million Boomers as they retire, Axelrod suggested they may not be interested in anything that smacks of the “R” word or old age.

“They may never retire,” Axelrod continued. “Active-adult communities (restricted to those 55 and older) are not for them. They say it would be a stigma to live there. Also, they are uptight about the rules and regulations at active-adult communities.

“Remember, this is the `Me Generation’ that rejected their parents’ attitudes,” she said.

Axelrod based her conclusions on focus groups held last year in Chicago, Raleigh, N.C., New Jersey and the Washington, D.C., area. Axelrod is credited with being one of the first researchers to use focus groups to show builders the customers’ perspective on their products.

Bill Feinberg, president of Feinberg Associates, the New Jersey architectural firm that conducted the focus groups, said the research was done to determine the preferences and hot buttons of the Baby Boomers, who were born between 1946 and 1964.

Feinberg said one economic group of Boomers - couples with a combined household income of up to $80,000 - are somewhat receptive to the active-adult style of retirement living. But even this group is looking for new designs in retirement housing.

Though Boomers are in denial about aging, Chicago-area developers are betting on the power of demographics. Building for Boomers is seen as a growth market.

Weatherwise, Chicago is not in the same league as Florida, Arizona or California as a retirement mecca. However, many of retirement age do not want to move to the Sun Belt. They want to stay close to family, friends and familiar surroundings.

Most retirees age in place, never moving from their long-time residences.

But Chicago-area builders are eager to fulfill the desires of those who do decide to start a new life in a home with the latest amenities.

The conditions seem ripe for a wave of retirement construction.

“Two-thirds of the nation’s housing stock was built before 1980. Boomers don’t want these houses,” said Rebecca Wood, vice president of John Burns Real Estate Consulting in Irvine, Calif.

“Many Boomers are sitting in a big house with lots of equity they can use for retirement,” Wood added.

Even so, experts estimate that 85 percent of retirees will not move. “If 85 percent stay home, fine. We’ll fight for the 15 percent,” said Peter Goergen, executive director of Burnside Homes, based in Downers Grove, Ill.

“Every day, 10,000 Boomers turn 55. We expect 75 percent of our business will be retirement housing in five years,” Goergen added.

Burnside has plans for three new age-restricted projects: 107 units in Olympia Fields, Ill., 98 units in Waukegan, Ill., and 180 units in Elgin, Ill. All will have clubhouses and recreational facilities.

“They will be built in locations where research shows there is a concentration of people in the 55 and older age profile,” Goergen said.

When Boomers go shopping for a “next-stage” place, what do they want?

Axelrod said focus groups reveal that “they like maintenance-free developments. Though they say they’re not old, they will make one concession - living on one floor. Boomers have been active, maybe jogging, and now they may have knee problems.”

Boomers dislike anything that reminds them of retirement, but they might consider a master-planned community with a pod for empty-nesters that is not segregated and allows contact with younger generations, according to Axelrod.

They also have a preference for a “nostalgic, small-town feeling, with convenience shopping within walking distance. But they don’t want to be way out in the boonies. They want to have access to a city for their urban fix,” she said.

Despite Axelrod’s findings that Boomers shun age-restricted projects, age was not an issue with two couples who bought in Chicago-area developments.

“Age didn’t cross our minds. Older people living here didn’t enter into our decision to buy,” said Maria Nielsen, 56. She and her husband, Chuck, 58, moved to Carillon Lakes in southwest suburban Crest Hill, Ill. from a house in Downers Grove.

Carillon Lakes, built by Libertyville, Ill.-based Cambridge Homes, which also has three other active-adult projects in the Chicago area, will have 1,120 houses when complete. An 18,000-square-foot recreation center is open.

“We wanted to downsize and decided to buy at Carillon Lakes in one day. This is not like retirement living. It’s like a resort, like a different world,” Maria Nielsen said.

Part of the lure for Chuck Nielsen is the fishing. He retired early from a job as a supervisor in an oil company. Maria still works part-time as an assistant preschool teacher.

They decided not to leave the Chicago area because of their family here.

Sharon and Dennis Lynch wanted a ranch with an open floor plan, full basement and three-car garage.

After raising three daughters, they decided to move from a house in Hoffman Estates to Del Webb’s Sun City Huntley. “Our kids didn’t want us to move to Del Webb, but I’ve always had older friends and it didn’t bother me. We have very nice neighbors,” said Sharon Lynch, 51.

They moved into a two-bedroom plan with a study in September.

Del Webb, the longtime leader in retirement housing, targeted the Chicago area as a potential market several years ago with its Huntley project, planned for 5,800 homes. Now the company, owned by Michigan-based Pulte Homes, is adding three active-adult developments locally.

“This age group is the largest growing segment of the population,” said Karen Brunhofer, president of Del Webb’s Illinois division.

The trend of retirement enclaves in the Chicago area is toward developments smaller than the typical Sun City mega resort.

One the three projects Del Webb plans will be in Elgin and consist of 1,030 ranch houses and have a clubhouse with a variety of sports.

Del Webb also will build an active-adult project with 800 houses and a clubhouse on 320 acres between the northern suburbs of Mundelein, Ill., and Hawthorn Woods, Ill. The third development will have 760 units in Will County, Ill.

“A mini-boom in age-restricted housing is under way, but it accounts for no more than 5 percent of the 30,000 homes built annually in the Chicago area,” said real estate analyst Tracy Cross.

He admitted that some Boomers have negative opinions about retirement housing, but “individual projects will fare well.” Some municipalities want age-restricted projects, in part because they do not affect the school population.

“The village (of Hoffman Estates) wanted age-restricted, so we’re building Haverford Place,” said Robert Meyn, vice president of sales and marketing for Ryland Homes, based in East Dundee.

Planned for 184 houses on 55 acres, the development will have a clubhouse, fitness center, outdoor swimming pool and hot tub.

Meyn pointed out that age-restricted developments usually are built on larger tracts, and age-targeted projects are better suited to smaller sites.

Age-targeted usually means two-bedroom ranches in a development with no tot lots or other amenities that would appeal to children.

“Neo-traditional communities are one answer to what Boomers want,” said Howard Rippetoe, vice president of Sharbell Development Corp. of Robbinsville, N.J., builder of Washington Town Center, a neo-traditional-style development outside Trenton, N.J.

HomeTown Aurora, a neo-traditional project in the Chicago area, reports that 15 percent of its buyers are empty-nesters.

“Retired people have time for relationships and the physical design of HomeTown encourages relationships because houses are built in clusters with front porches and patios,” said Perry Bigelow, president of Bigelow Homes, developer of the 1,300-unit HomeTown Aurora and also HomeTown in Oswego, Ill.

Older residents also congregate at the general store, which has rocking chairs on a porch overlooking a park.

While HomeTown has features that attract older buyers, it is not an age-restricted. “Most people don’t want to be put away in a homogeneous warehouse,” Bigelow said.

The future market for retirement housing is much larger than just age-restricted developments, said Jack Sorenson, president of Elgin-based U.S. Shelter Group.

“Older buyers are attracted to several types of housing. Among them are age-targeted projects, midrise condos in suburban downtowns and special-care facilities,” Sorenson said.

“Boomers are getting ready to change housing,” said Ray Franczak, president of Des Plaines-based R. Franczak & Associates, which specializes in midrise condos and is building the Sienna, a 36-unit, 5-story condo, and the Monte Clare, with 78 units in two-midrises, both near downtown Des Plaines, Ill.

“Empty-nesters, in their late 50s and up, account for 60 percent of our sales in these buildings. They sell their home in Des Plaines but don’t want to leave town. They want to be near their church, their bank. They still want to feel part of the community,” Franczak said.

As retirees age, their needs are met by other types of housing. A new development for older seniors is Naper Place, a 4-story, 49-unit building under construction in downtown Naperville, Ill. The independent congregate housing has one- and two-bedroom rental units.

“Naper Place is for those at a different stage. They have slowed down, are less mobile and may have lost a spouse,” said Dave Sanderson, president of HPD Cambridge, the St. Louis-based company that is building the project.

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MISCONCEPTIONS

As home builders gain experience in the retiree market, they are discovering some misconceptions about older buyers. Here are some of them.

1. All buyers in age-restricted communities are retired.

In fact, as many as half still work, full or part time, according to Chris Shaxted, executive vice president of Lakewood Homes, based in Hoffman Estates.

2. Golf is the favorite sport of retirees.

Actually, walking is the preferred exercise, according to Peter Goergen, executive director of Burnside Homes, based in Downers Grove.

3. Retirees move down to smaller spaces.

The recent trend is toward larger retirement homes, Goergen said.

“We sell more options at active-adult communities than at regular developments,” said David Smith, vice president of marketing for Cambridge Homes, based in Libertyville.

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? 2004, Chicago Tribune.

Distributed by Knight Ridder/Tribune Information Services.

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