PHILADELPHIA — By 2030, all baby boomers will have reached or passed the age of 65, and now is the time for senior living operators to conduct strategic planning to see whether expanding offerings to address a service gap in the middle market would be a good move for their organizations.
That’s one message that speakers shared during a Wednesday morning session on middle market seniors housing at the LeadingAge Annual Meeting & Expo.
If an organization decides to serve that market, then several additional decisions await, said the speakers — Beverly Asper of Baker Tilly Virchow Krause LLP; Lynn Daly of BB&T Capital Markets; and Craig Kimmel of RLPS Architects. They shared several tips to help make the endeavor financially feasible, noting, however, that each operator’s situation will be different.
Such communities most likely will be rental communities or ones with low entrance fees (no more than $1,500), the speakers said, because target residents won’t be able to afford high entrance fees.
Market research, including a competitive analysis, is critical before jumping into a project, Asper said. Operators looking to serve those aged 55 or more years will be competing against all other rental properties and homes in the area, whereas those serving adults aged 75 or more years will be competing against low-income housing and retirement communities, she said.
Survey residents of your existing communities, and their families, via focus groups or mail or online surveys, Asper recommended. Also get feedback from people on your community waiting list and residents of the broader community, she said.
“What are they looking for? What would cause them to move? What can and can’t they afford?” Asper said.
Once an operator decides that a middle market community is viable in a particular area, locating the community away from an existing senior living campus of the operator enables the middle market community to form its own identity, Asper said. A separate location also prevents creating an expectation among middle market community residents that they will have access to the same amenities and services that residents of higher-end private-pay communities receive, she said.
Locating the middle market community near an existing community, however, will allow the operator to realize economies of scale and similar benefits, Asper said.
Consider repurposing existing properties to save construction-related costs, Kimmel said. Abandoned warehouses, underperforming retail properties, shopping centers and former corporate campuses might be options, he said.
Also consider designing properties to enable aging in place, which may be a draw for prospects and a necessity if they move in.
To save money while providing amenities for residents, look into partnerships with existing community organizations for options such as swimming pools, fitness centers, restaurants and coffee shops, Asper said.
“HGTV is a nemesis for us, because everyone is expecting more,” Kimmel said, adding that open concept and loft configurations can help operators maximize space. “Every square foot in that plan really has to work hard,” he said.
Bigger buildings allow operators to be economical, Kimmel said. He recommended a rectilinear footprint with simple roof construction, balconies under the main roof structure or of Mediterranean style, wooden stairs and 13R (residential) sprinkler systems, noting that providers will want to check applicable building and code requirements.
Or consider modular, prefabricated units, which to some degree are built off-site to enable relatively quick construction, Kimmel said.
Other ways to be economical to keep rents low, he said, are to consider natural ventilation or individual cooling units instead of central air, choosing a smaller elevator (if relevant) and only having one per building, minimizing masonry, and using vinyl double-hung or single-hung windows and ventless clothes dryers.
Throughout units, Kimmel said, consider builder-grade cabinets, lighting and plumbing, and limit finish package options.
He noted the challenge of streamlining and simplifying such projects, because prospective residents will want to have options and the ability to customize their spaces. “They want what they want, and if you don’t give it to them, they may not come,” he said.
Set the baseline for finishes as low as acceptable — perhaps laminate countertops, vinyl baseboard and carpet or sheet vinyl on floors, for instance — and then let prospects buy upgrades, Kimmel advised.
Paint on walls, he said, can “create interest with color.”
Market a middle market senior housing community carefully, Kimmel said. “You want to differentiate it from just an apartment building,” he added.
A session attendee said her organization’s experience is that larger marketing budgets are needed for middle market properties, because many people are unfamiliar with them.
The 2019 LeadingAge Annual Meeting & Expo ended Wednesday. Next year’s meeting will be Oct. 27 to 30 in San Diego.