Startups increasing the ability to age in place

As an interesting play to an earlier post on aging in place, Honor and a competing company, HomeHero, are creating new delivery methods of in-home supportive care.

Customers of Honor spend $25 an hour to send the company’s CarePros to an elderly person’s home for anything from physical activity to bathing and housekeeping. Honor has built in extra tools to make the process more transparent and efficient. There’s an app for CarePros that lets them know about the customer’s conditions ahead of time.

The direct benefit to seniors and other care recipients is obvious. Indirectly, this helps property owners with a care-intensive resident base. I could easily see cooperative agreements with similar services either included in rent or via resident incentives.

Residents ≠ Tenants, Properties ≠ Assets

There are times when the right word escapes me. When I try to describe a concept or notion that I may or may not fully comprehend, I sometimes struggle for the right word or phrasing. Nevertheless, I well remember a day that I was gently corrected about terminology.

"We have residents, not tenants."

To many, that may seem a meritless distinction, but it conveys a particular viewpoint about the relationship between owners and managers and the people who pay rent. "Tenant" is a contractual term, one that suggests a notion of commodification of both the leasee and the lessor. "Tenant" suggests either could be easily substituted with no ill effect. "Resident" connotes a deeper sense of relationship, and to my ears, an increased amount of respect for the individuals who pay rent.

Relatedly, even though my title has long been "Asset Manager", I almost never referred to my portfolio with that term. I run properties or communities, not deals or assets. I started in this industry as a 'real estate guy" who walked markets, analyzed floorplans, and stood in front of buildings to answer the "what if" questions. I only gradually and painfully learned the financial side of the business, where one is more likely to hear the word "asset". One of my supervisors hired me in part because, "You kept using the word property instead of assets, and that's the kind of person we want on this team."

It may seem a small thing and perhaps it is, but in my experience, it shapes the relationship in important ways.

Our old planning rules of thumb are “all thumbs” | City Observatory

Over at City Commentary, a brief dissection of heuristics:

Five "Old Rules of Thumb"

  1. We should have a high level of service
  2. Wider streets are safer
  3. "Enough" off-street parking for every use
  4. Car trips are generated by every land use
  5. Hierarchy of streets
Photo by David Shankbone, Wikimedia Commons.

Photo by David Shankbone, Wikimedia Commons.

Four "New Rules of Thumb"

  1. Closer is better
  2. Slower is safer
  3. Sharing is efficient
  4. Design for accessibility not mobility

Suburban campuses and adaptive reuse

In New York, the adaptive reuse of old buildings is a well established practice. In formerly industrial cities like Durham, tobacoo warehouses are repurposed for commercial, retail, and residential use.

Durham's American Tobacco Campus was a catalyzing reuse of an exceptional civic resource in the middle of downtown. Courtesy of ATC's Flickr account.

Durham's American Tobacco Campus was a catalyzing reuse of an exceptional civic resource in the middle of downtown. Courtesy of ATC's Flickr account.

Most buildings constructed since WWII were purpose built, reflecting design choices and efficiencies that permitted the best use of space for their explicit purpose. Window heights, column spacing, fire stair locations, all of these aspects are asset class specific.

The Washington Post recently discovered that the increasing vacancy of suburban office campuses is problemmatic.

The building in North Bethesda has eight floors. It is 98.7 percent vacant. There is one life form within its nearly 210,000 square feet — not counting the lobby fern on life support — and she wears a security uniform, sits at the front desk and listens to the muffled whine of a faulty alarm for hours at a time, every day between 6 a.m. and 2 p.m.

The loss of tenants in these developments reduces real estate tax collection, reduces employment, and generally increases the share of maintaining infrastructure on those who remain. The Post has done a decent job of documenting this decline across the DC metro.

“One of biggest challenges is that 1980s, successful classic suburban development in Rock Spring and [Interstate-270] corridor may have insurmountable challenges to re-gear and meet current market demand for Metro, mixed-use environments, amenities and walkability,”

The rise and decline of these developments was chronicled in Louise Monzingo's 2011 book Pastoral Capitalism. Crain's Chicago documented this contemporaneously, noting that restructuring reasons created the ability for Sara Lee to relocate from Downer's Grove (an attractive rail-oriented location in the western suburbs) to downtown Chicago.

Only The Boston Globe attempted to discuss any reuse of these properties. In a 2014 piece, The Globe noted:

[Tye] added that it’s also hard to duplicate urban settings within suburban parks if they’re not near public transit and don’t have easy pedestrian access to offices. “This is a source of some disagreement within the industry,” he said of housing’s role in office park redevelopment.

In contrast, Nordblom Co., owner of Northwest Park in Burlington, is a firm believer in “live, work, play.” Three years ago, it launched a massive $500 million project to redevelop about half the 285-acre office park to include 600,000 square feet of retail space, 300 new apartments, a 225-room hotel, and 3.5 million square feet of new or refurbished offices.

None of the projects cited by The Globe included reuse of the existing structures, merely the land. While I'm not aware of many reuse projects involving suburban residential, as this housing stock ages into its 30th and 40th years, the economic potential of these properties is likely to decline absent a more intense development of nearby parcels. Insightful purchases will be essential if these properties are to provide above market returns.