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Grosvenor Report Sees Significant Impact of Aging Population in Urban Centers

Newport Beach, RETS Associates, Cox Castle & Nicholson, NAIOP, Commercial Real Estate, Women in Commercial Real Estate Survey

By Michele Chandler

While there’s much emphasis today on building housing for working-age people and younger families, a new report says a rising worldwide tide of older residents could impact how offices and homes of the future are designed.

In the residential sector, new features will emerge as the industry accommodates a generation of “last-time buyers” aged 55 and over, according to “Silver Cities: Planning for an Aging Population,” a report released earlier this month by Grosvenor Group.

Changes are also ahead in the office sector, as workers aged 60-plus are projected to outnumber employees under the age of 25 by start of the next decade, according to the report by Grosvenor, a British-based real estate investor and developer.

“Most public policy is focused on affordability and encouraging ownership among young families. But we wanted to highlight that there is a large and growing section of the market at the opposite end of the age spectrum that requires attention, too,” said Brian Biggs, director of research for Grosvenor Americas, explaining why the company’s focus on real estate implications as the world’s population ages.

Exactly how the impending demographic shift will impact commercial and residential development remains to be seen, said Biggs, one of the authors of the report.

But, with older employees delaying retirement, there are significant implications for how offices should be designed and how companies ought to configure their workspaces for use by multiple generations.

For example, Biggs said, possible changes that elder-friendly workplaces could implement include eliminating long corridors in favor of locating offices, company kitchens and bathrooms closer in clusters, so people don’t have to walk as much.

The Bay Area and greater Seattle will be part of the coming international “age wave,” even though builders and developers in the United States are not leading the movement to design buildings and space that better accommodate that group.

“Unfortunately, not one U.S. city really comes to the front of my mind as somewhere that is implementing any of these approaches,” said Biggs, who added that Grosvenor conducted its research “as a response to that fact.”

In the report, Grosvenor Chief Executive Officer Mark Preston said the company’s research is designed to “encourage discussion and debate across the wider property industry.”

Biggs said that Seattle will see its percentage of seniors rise to 16.8 percent in 2030, up from 12.6 percent in 2015. San Francisco’s tally will increase to 19 percent, up from 15 percent. A marked increase is also projected for Washington, D.C. (to 17 percent from 13 percent) and New York (to 20 percent from 15 percent).

In 2045, Grosvenor estimates that the proportion of people internationally who are age 65 and over will rise to 25 percent, up from 16 percent in 2015. During the same period, the population of people who are aged 20 and under will shrink to 21 percent, down from 24 percent, the company projects.

Among the 22 cities the report sampled, Tokyo and Shanghai will be home to the greatest percentage of seniors in 2030. The percentage of the population aged 65 and older in those Asian cities is expected to reach 29 percent in Tokyo (up from 24 percent in 2015) and 21 percent in Shanghai (up from 11 percent in 2015).

While today’s cities are generally designed for active people still of working age, “the elderly cannot live at the same high density as the young,” said the report, giving examples of seniors needing ground-floor access, larger rooms or additional space for in-house caregivers.

That’s why the current-day design strategy “of simply building ever-smaller micro-apartments aimed at young workers is likely to be a short-term solution that addresses current housing needs, rather than helping to create long-term, sustainable [and] age-friendly communities,” the report says.

Grosvenor said that many elderly people prefer to receive long-term care at home and only move to assisted living center or care facilities when forced by deteriorating health. Until that happens, elderly residents might end up living alone in large suburban homes, creating “an untapped potential market for quality, age-friendly housing,” the report said.

“By developing housing products that are more appealing to older buyers, the real estate industry could help unlock the number of larger properties available for younger working families, who have higher space requirements,” the study said.