Seniors Housing Business

FEB-MAR 2018

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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54 www.seniorshousingbusiness.com Seniors Housing Business n February-March 2018 What's on my Mind Market Research is More Important Than Ever Increased competition means knowledge is key to knowing where, when to develop. By Susan Brecht Understanding the market where your company is considering devel- oping a seniors housing community of any type is a critical element of the planning process. Rather than waiting until you are ready to go to financing, there are many compelling reasons to have a study conducted by a qualified, experienced firm early in the process. Markets are becoming much more competitive as an increasing num- ber of players are compelled by the demographic trends. But national trends don't tell you what you need to know about the market where you will develop and operate your community. One of the most important parts of a market study is understanding what your geographic market area consists of. Drawing a radius or drive time is not sufficient in defining the market area. Overstating the size will lead to errors in all other elements of the study. So it is important to conduct interviews with representatives of organizations that know the area. Examples of representatives include planners, realtors and other organizations that serve local seniors. Many factors to consider Every market is different, so it is critical to understand the trends in the market area you will be serving. Those trends include both the demographics and the organizations that are serving the seniors housing market. In terms of demographics, look at the growth rate for total population, seniors population, target market household income and the adult child segment (those age 55-64) who are likely to influence decisions being made by elderly family members. With regard to competitive communities, be sure to look at both those within your defined market area and those immediately proximate to it. Are the com- petitors owned by for-profit or nonprofit organiza- tions? Are they experienced providers or new to the business? Are they expanding or redefining their existing communities or building something from the ground up? Which products are really competi- tive with what you're developing and how are they counted in the feasibility study? Lines are blurring between independent living and assisted living, as well as new independent living products that might include active adult rentals, independent living apartments with no ser- vices and apartments with personal care services. The study should tell you what the depth of the target market is for your product and whether or not it is sufficient to support your plans, taking competition into consideration. If the results are positive, a com- prehensive study will tell you what features will enhance your ability to succeed: overall size, mix of levels of care, unit sizes and pricing. Plan for changing demands Will your community be flexible enough to respond to changing demands of consumers after it is built and operating for 5 to 10 years? This is particularly important given that we are getting ready to go through a generational shift from the Silent Generation to the Baby Boomers. Boomers will be much more demanding and will probably wait longer to move in unless you create a senior living product that is programmed vibrantly and is well connected to the surrounding community. For example, building seniors housing in a mixed-use community pro- vides the advantage not only of a multi-generational environment, but it is likely to have amenities that are very attractive to all generations and are walkable. Should your project be phased? Is it possible to mitigate risk by not developing everything all at once? This is both a market question as well as an architectural one. One final element is to learn as much as you can about the local labor market. Will there be sufficient qualified staff to operate your commu- nity? This ranges from top-level management to on-line operational staff such as nurses, aides, housekeeping, dietary and maintenance. Are new health care organizations coming into the market (such as a hospital opening up a satellite facility) and what will their wage scale look like compared to yours? Once you think you've got what will work, it's time to test your planned community through surveys and focus groups. Reaching out to the local target market will provide invaluable feed- back in the planning process. For example, focus group participants can react to such issues as unit design and layout, services and amenities (what should be included in the fee versus offered on an a la carte basis), and even pricing. Taking all of these steps will go a long way to ensuring you are likely to succeed. Susan Brecht is president of Brecht Associates Inc., a senior living consulting firm based in Pine Beach, N.J. Susan Brecht Brecht Associates What's on YOUR mind? Got something to say? Got an idea? Got a tip? Discuss your proposal for possible publication with Editor Matt Valley at mvalley@francemediainc.com. Brecht Associates researched the area surrounding The Hearth at Drexel in the Philadelphia suburb of Bala Cynwyd, Pa., for a client and discovered that market demand supported converting some of the property's assisted living units into memory care.

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