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Sunday, May 22, 2022

SENIORS—Del Webb Probing Market for Adult Community Sites

Del Webb Corp. is actively exploring development opportunities in Los Angeles, representing a marked departure for the Phoenix-based developer. The publicly traded company has built a national reputation for developing sprawling “active-adult” communities in wide-open areas, such as its Sun City community in Palm Desert.

Spokeswoman Lynn Reaves confirmed that the publicly traded company is “looking at a few pieces of property in the L.A. area,” and that company officials hope to make some decisions about possible Los Angeles developments within the next six months.

She declined to discuss further specifics and industry observers noted that the company is notoriously tight-lipped about revealing its plans while they are still under development.

Reaves said that any Los Angeles project would be part of a broader, national effort to leverage the company’s brand identity and tap into changing demographic and retirement trends.

The company, which last autumn fended off a takeover bid by a rival developer and quashed a revolt by a group of shareholders, recently announced that it is looking at new business models, including smaller active-adult communities in the range of 1,000 to 3,000 acres, smaller-scale “specialty” multi-generation communities and new country club communities aimed at the baby boomer market.

The company also said it is exploring joint ventures with other real estate companies across the country.

Del Webb has 17 large-scale Sun City and other active-adult communities in California, Arizona, Nevada, Texas, South Carolina, Florida and Illinois.

One factor that suggests any Del Webb projects in L.A. might be of its new, smaller varieties is that there are very few undeveloped L.A.-area parcels large enough to accommodate a traditional Del Webb community.

Dean Wehrli, who follows Los Angeles real estate developments for consulting firm The Meyers Group, said the only such parcel in Los Angeles County that he is aware of is Ritter Ranch in the Antelope Valley.

But, he and other industry observers noted, such a far-flung location runs counter to a major trend that is just starting to affect the “active-adult” market: Many middle- and upper-middle-income Angelenos are now approaching retirement age, and they are rethinking their housing options.

The larger houses in which many of them raised their children are becoming burdensome, but these “empty-nesters” do not want to move far from where they have settled. In addition, the fear of crime, which helped drive many residents of retirement age away from Los Angeles in the late 1980s and early 1990s, has eased.

“They want to be an hour’s drive to the kids, and they want to be close to good restaurants, entertainment venues, shopping, museums, libraries and health care,” consultant Wehrli said. “Sure, a lot of them want to be close to a golf course, but they also don’t feel they are ready to move to a traditional age-restricted community.”

Real estate officials added that there is a wide variety of people who fall under the category of seniors, ranging from physically active adults in their late 50s and 60s many of whom may have at least a part-time job and do not consider themselves “retired” to the infirm and very elderly who need some form of assisted living or nursing care.

The housing needs and preferences for these people are very segmented, experts added, with income, lifestyle and health all playing major roles.

One solution in serving the housing market for all types of aging Angelenos, real estate experts said, lies with infill developments on smaller existing parcels that can be redeveloped or plots of vacant land in developed neighborhoods.

Los Angeles developers, however, have generally been slow to exploit this opportunity, said Wehrli and Dave Stolte, the Irvine-based director of Charles Dunn Co.’s Senior Housing Group.

Dearth of projects

Between them, Stolte and Wehrli could name only a handful of projects currently being developed, all of them aimed at the elderly rather than the newly retired and encompassing some form of assisted living.

These include a 168-unit project in Pasadena; a 336-unit project in Sherman Oaks combining independent living, assisted living and nursing home care; a 64-unit project in Beverly Hills; and a project in Culver City to be called Grandview Palms.

Stolte cited industry reports showing a shortfall of 8,000 to 12,000 senior housing units in Southern California, a situation that will only worsen as more baby boomers retire.

“The demand is certainly there, and increasing all the time, but you’re not seeing too many projects, partly because there’s not a lot of (developers) in Los Angeles that have experience in these types of developments,” Stolte said.

As with nearly any type of real estate venture in Los Angeles, high land and building costs have also inhibited projects from being developed for seniors.

In addition, some investors who might normally put their money into senior housing developments and other real estate projects have, until recently, been directing it toward seductive Internet ventures that offered a New-Economy cachet and promised a higher rate of return, Stolte said.

“Things have been upside down because a lot of the people who are normally interested in (senior housing and other real estate ventures) were jumping into dot-coms,” Stolte said. “We’re starting to see things turn around with the recent fall in Internet-related investments.”

Stolte and Wehrli said they remain optimistic that developers will increasingly recognize the potential of developing all forms of active-adult and senior housing in Los Angeles.

“The demand is becoming so great that it is inevitable,” Stolte said. “Some developers are going to do very well here it’s just a matter of who and when.”

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