Capitalizing on the demand for luxury housing with services, Sunrise Senior Living has teamed up with a St. Louis-area developer to convert a 23-story high-rise into upscale apartments exclusively for seniors. Sunrise's joint-venture partner is Conrad Properties, the original developer of the building, Clayton on the Park. Located in downtown Clayton, Mo., it opened in 2000 as an upscale hotel and apartment building.
Sovereign Bank of Boston provided $65 million in permanent financing. About $20 million will be used to renovate the building. Upon completion, it will feature 209 apartments. The first three floors of the building are being redone and will include new amenities such as a wellness center, multiple dining venues, a library, spa, classrooms and an art studio.
“This is not a distressed asset,” notes Wendy Timm, CFO at Conrad Properties in Clayton. “It has performed well.”
Situated on Shaw Park, the building is Clayton's tallest and a well-known local landmark, according to Timm. Occupancies have been running at about 95% with some of the highest rents in the St. Louis area. Rent for a one-bedroom apartment starts at about $1,500 a month. The hotel portion of the building has had an occupancy rate of about 70%.
So why change the building? It was originally designed so it could be converted to another use depending on market conditions, Timm says. Seniors housing makes sense now because of the area's demographics. About 22,000 households headed by those over age 40 and with an annual income of more than $100,000 live within a three-mile radius of the property. "It's a bull's eye" says Timm.
Luxury high-rises for seniors are becoming more common in urban areas, experts say. For example, a 53-story seniors-only building is under way in downtown Chicago just off Michigan Avenue. A new $200 million 30-story retirement high-rise will be built in downtown Portland, Ore. Most big cities have similar projects.
Urban projects appeal to older people who want a city lifestyle. A seniors-only project has the added appeal of offering a lot of onsite services, such as meals and housekeeping.
Clayton on the Park already has an upscale reputation that should draw older homeowners who live in the area, but who want a smaller place with services and lots of activities within walking distance, Timm says. She describes the building as the “ideal infrastructure” for seniors. The project will have none of the “coming-out-of-the-ground risks” of a new building. The investment return looks good too.
Rents after the conversion will double and start at about $2,950 a month. Apartments will range in size from about 600 sq. ft. to 1,800 sq. ft.
The building will not have any assisted living or nursing care units. A home care agency will have an on-site office for those who need help in their apartments. Rents include meals, utilities, transportation, educational programs, 24-hour emergency response, housekeeping services, and a concierge.
Some of the amenities, such as the fitness center will also be made available to seniors who live in the area but who are not residents of the building. Developers of seniors-only buildings are increasingly opening amenities to the greater community. This gives potential residents exposure to the property, while boosting attendance at the building's facilities and restaurants.Construction is already under way at Clayton on the Park, according to Stacey Tew-Lovasz, executive director of the building for Sunrise. The hotel portion of the building is being converted in the first phase, which should be complete next September. The other units in the building will be remodeled as apartment leases expire and current residents move out.