Continuing Care Retirement Communities (CCRCs) have traditionally been largely self-contained structures that can be fenced off from the outside community.
However, if final approval is gained from the Maryland Department of Aging by the City of Annapolis, a new CCRC, Crystal Spring, to include 50 health care beds and 350 residence apartments and one-story private and duplex homes, will rise just off of the intersection of Forest Drive at Spa Road — and thus become part of a new trend in that sector of the senior housing industry.
Gone will be the days of the residents being somewhat cordoned off from the rest of the community in favor of a more inviting atmosphere, with all-age residences and retail options on the grounds.
Approval should mean an economic boon to the city, as well: The early numbers indicate that the project should create approximately 1,100 permanent jobs in the city, 700 more in the county and state; and more than $900,000 in net fiscal benefits for the city and more than $1.3 million for Anne Arundel County annually. Construction is slated to being in mid-2012.
The developer, Crystal Spring Development LLC, owner/operator National Lutheran Communities & Services and the other stakeholders are hoping the project will result in a handsome economic impact as the residential real estate industry continues to try and move up and out of a challenging financial market.
A Sense of Community
In noting the demand for [senior housing] as a CCRC, “It’s important to point out that this product appeals to people who are looking to the future,” said Bob Kramer, president of the Annapolis-based National Investment Center for the Seniors Housing & Care Industry.
But one industry issue “that has, without question, affected CCRCs is the housing market downturn,” which has struck fear into seniors about “not being able to sell their houses” when pondering a move, Kramer said.
“Then [came] the great recession and fears of a double-dip. That leads to people, especially seniors, postponing decisions until the last minute. And at that point,” he said, “they no longer qualify to enter a CCRC because their health has deteriorated.”
Still, long-term, Kramer thinks that Crystal Spring will be successful and presents a “very good alternative” within the local market.
“In this case, that means it’s not a place that’s set up out in the country or fenced in,” he said. “Crystal Spring represents a new type of CCRC that we will see in the future: the community-integrated project.”
So, at Crystal Spring there will be about 125 all-ages townhomes on the grounds, with a grocery store, a cultural arts center, a boutique inn and spa, and a retail area within the neighborhood. “Such integration makes people feel like they are part of the pulse of a natural community,” Kramer said.
Sparking Demand
It remains to be seen if Crystal Spring will be successful in the broader sense, but the new-ish approach of community integration and the dearth of CCRCs in Central Maryland are giving observers reasons to think that the market can accommodate more CCRCs.
“I think we have enough for today, but not for future demand,” said Anirban Basu, president and CEO of the Baltimore-based Sage Policy Group, which provided analysis for the project in 2009. “We know that this will be one of the growth sectors of the U.S. and Maryland economies due to the graying of America and the ensuing shifting demographics.
This image of the Crystal Spring Village Green depicts the Inn/Spa and Performing Arts Center.
“So, there is an opportunity here,” said Basu, “to create communities for older Marylanders that are attractive, safe, provide a continuum of care and are integrated into the area’s communities.
“Traditionally these CCRCs have been somewhat isolated from the local communities. There may be many residents who seek precisely that” type of isolation, he said, “but others seek integration and CCRC communities that are basically open” to the rest of the surrounding area.
“So, Crystal Spring will represent the next generation of retirement communities in Maryland, as well as across the country. This is cutting edge,” Basu said. “There is no one-size-fits-all here, but Central Maryland does not have a facility like this one.”
Marketing the Subgroup
Relatively speaking, Maryland doesn’t have many CCRCs, period. While there are about 1,900 CCRCs nationwide, Maryland is home to about 40, according to Steve Maag, director, residential communities with Leading Age, a trade association for the senior housing industry in Washington, D.C. He feels that’s partially due to the down market of recent years.
“It’s the same issue with any other type of product with a real estate overtone,” Maag said, but he likes the trend toward integrating the new CCRCs into the community and pointed out that existing CCRCs “are taking steps to reposition themselves, as well. We think that CCRCs are a great model, but they need to cater to trends and make the same offerings that are available to the rest of the market.”
However, despite the obvious conveniences, there is still a strong sentiment for the elderly to stay put in their homes. Kramer observed that, “Not everyone is comfortable with the rental model where you make a large down payment and many people are attached to their homes. A house in the suburbs was the American Dream that became part of that generation’s identity.”
So what Kramer termed the “planners” who move to CCRCs are part of the smaller subgroup that qualifies. “However, the subgroup must be large enough for the economy of scale to afford the expense to build the project with the amenities that these residents want.”
Aging in Place …
Sort of
But Maag stated that “in today’s market, seniors are starting to see CCRCs as a place for a secure retirement, so we think that there will be a very strong demand for them in the future.”
While there are a number of CCRCs around Baltimore (like Charlestown), with more on the north side (Oak Crest Village), but relatively few in the Howard (Vantage House)/Anne Arundel (Ginger Cove) market, Maag thinks that “there will be more of them in different areas, depending on the demographic of given communities.”
That’s because, for those elderly residents who do want to move, most of them don’t want to move very far.
“Data still shows that about 75% of the people who move into these places are from the local market,” he said, “so a market must have an ample number of seniors before such a project is considered.”
But the market for Crystal Spring is apparently ample, which excites Lara Fritts, president and CEO of the Annapolis Economic Development Corp.
“The fact that the project will generate about $2.5 billion in new overall business sales during the first 10-year period means that, while the city gets no sales tax, many transactions will happen in the city,” she said. “That will assist our existing businesses in their growth,” she said.
Fritts added that the city is now waiting for the resolution of minor issues, such as the results of the traffic plan that is being handled by John Arason, the city’s director of planning and zoning, via a third-party source.
While Kramer doesn’t find Howard or Anne Arundel counties to be prime markets at present because of the Baltimore area’s ample supply of product and the slow market, he’s optimistic long-term.
“Until mid-2012, entrances to projects like Crystal Spring will be affected by the poor housing market,” he said. “But the market will pick up. And will we see more CCRC product available in the future? Absolutely.”
