Hotel/Senior Housing Combo Paves New Ground In Detroit
February 16th, 2011
An historic structure in Detroit will now take on new historic significance as its new owner combines two popular forms of commercial real estate in one building: senior housing and a luxury hotel[1]. Mike Roberts, CEO of St. Louis’ Robert Companies, believes that his initial and groundbreaking entry into the Detroit market in the former riverfront Omni Hotel will be successful because it combines cash-flow consistency with the higher volume of profits possible in a hotel. “The senior residence side of things will give us a consistency in cash flow and income,” he explained, while “we’re running a much smaller hotel.”
Roberts plans for the hotel to be an “upscale, boutique property” operating in conjunction with a high-end senior living property. According to Stephanie Donaldson, the residential manager to-be, seniors are attracted to living environments where they can “interact with a younger population” and “be around people of all ages.” This unusual approach could be the answer to a problem plaguing existing senior living communities right now. Many homebuilders are not particularly confident in the “mature-market real estate sector” at this time because baby boomers, who were expected to flood the senior living market, are opting to stay in their homes due to a loss in equity[2]. As a result, the plethora of senior residences constructed in the past five to ten years could stand empty unless they have something to attract seniors and other sources of cash flow. Roberts’ hotel/senior living combo could represent an attractive solution.
Rates have not been set yet, but will likely start around $2,000 per month. Seniors will have access to all hotel amenities and volunteer opportunities through hotel-sponsored charities to work with children and within the community. Critics of this model believe that “market confusion” could prevent either or both facets of the property from functioning properly. Would you move into or invest in this type of residence?
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[1] http://www.crainsdetroit.com/article/20110213/SUB01/302139975/former-omni-to-combine-hotel-senior-housing#
[2] http://www.upack.com/press/article/senior-housing-market-viewed-as-weak-among-homebuilders-800404081
February 17th, 2011 at 8:46 PM
Interesting approach to address two major issues senior housing and hotel. If this works it could open a new niche.
March 24th, 2011 at 12:54 PM
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