Leon Pastalan of the University of Michigan calls the upcoming sweeping demographic shift in America "mass longevity." Pastalan, who is director of the National Center for Housing and living Arrangements for Older Adults, is talking about the tsunami of our population age 65 and over that will surge from 35 million today to a whopping 80 million by 2030. And here's the kicker--six out of 10 boomers age 48 to 52 are likely to move to a new home for retirement, according to the annual "Baby Boomer Report," conducted by the Del Web company. Pastalan, who authored University-Linked Retirement Communities (Haworth Press, 1994), says his book garnered only a ripple of sales when it was released, but in the last five years, the book has received renewed interest.
Given the data--and the potential revenue--it is no surprise that more IHEs are now considering or planning to build retirement communities on or near their campuses, either independently or in partnership with developers.
University-Linked retirement communities (ULRCs) are not new. There are some 50 such communities scattered throughout the country, at both small and large institutions, attracting retired faculty and alumni, parents of faculty members, or the population at large, who desire a lifestyle that is tied to both a college community and academic environment.
And ULRCs come in all shapes and sizes, from large country club for-profit single-family housing developments that cater to the active and the affluent, to small nonprofit austere apartments or condominiums that provide continuing care for the lifetime of the residents.
So what is the incentive to consider a ULRC? Revenue. Whether you earn revenue by selling or leasing vacant land, or form a partnership with a developer, or even license your school name to a developer, the bottom line is that such investments can add significant and recurring sources of revenue.
In addition, there are ancillary revenue benefits. Campus retirees spend money on campus events and activities. They are a welcome addition to the community because they pay taxes and do not burden the school system. They also are a reliable source for fundraising and bequests. And, the URLCs can provide employment opportunities for students.
But revenue aside, Pastalan, who is a semi-retired professor of architecture and a principal with Collegiate Retirement Community Consultants, asserts that it is "critical" that IHEs recognize changing demographics and providing services to older Americans should be "first and foremost and extension of their mission," he says. Moreover, Pastalan observes that because alumni who have a presence on campus are IHEs staunchest supporters, "a lot of development officers are missing the boat and don't realize what a goldmine they are." He cites Iowa State University, which has received some $3 million in support from the residents of a URLC that has only 100 units.
Robert Chellis, senior advisor and principal of Chellis-Silva Associates Senior Housing, in Wellesley Hilts, Mass., points out the one resource that many IHEs have at their disposal is land.
"Most schools have empty land, and you can build a several-story retirement complex on as little as 13 acres, depending upon your zoning requirements," says Chellis. He mentions Lasell College (Mass.) as an example, where a 107-unit facility was built on 13 acres.
Chellis notes that retirement complexes can be very profitable, generating long-term income in the millions of dollars, depending on the size of the complex. IHEs can make money from the outright sale of the land, leasing land, or setting independent partnerships with developers that can contribute long-term income. He also notes that many CFOs are Cooking more at real estate opportunities as a way to expand their school's investment portfolio.
"If you lease land for a complex, for example, you earn annual income, and at the end of the lease term, say 50 years, you can decide to continue the arrangement, or use the building, which you now own, for other purposes," Chellis explains. …