By Jack Cumming
Kathryn Burton Gray is one of the brightest, most experienced minds in senior housing. She was on a “capital markets update” panel at the recent Interface Seniors Housing West Conference in Los Angeles. Something she said resonated with me as hitting on an industry blind spot that I’ve long felt.
“It’s the Consumer, Stupid”
Ms. Gray is much more tactful than James Carville was when he advised Bill Clinton’s 1992 campaign, “It’s the economy, stupid.” His message, though, was to the point and one that the senior living industry needs to heed.
She said, very simply and very directly, “This is a consumer business.” She went on to say that most of the top consumer behemoths are taking a close look at senior living. They may not be in the capital markets as lenders, but you’ll find them at conferences, and some are beginning to make strategic investments. At least, that’s what I understood her to be saying. I would have loved to have explored this more with her.
Unfortunately, there’s no recording of the Interface Conference, but I did find a video podcast from a few years ago where she said something similar to what impressed me. Here’s an excerpt, lightly paraphrased for clarity, from the transcript of that podcast.
“What I think is really interesting is that active adult has found its way within the multifamily sector. There are active adult communities and lifestyle branding to create a hybrid of seniors [oriented] multifamily. I think we need a new lens in how we build products.
“I don’t want to age myself, but to just put it candidly, I’m on the end of the baby boom, where I’m really Gen X. I think we’re still building for the Silent Generation. I want our industry to step back and look at other consumer companies, whether it’s Amazon, whether it’s Disney, whether it’s Google, something that understands people.
“We don’t ask what people want. We just assume that it’s been done this way before. We’re going to develop it the same way, i.e, the spokes-and-hub design. Is that what we want? I think my generation will be thinking as we get older: do I really want to keep up my house? do I want to keep up my landscaping? do I want all the maintenance responsibility?
“Then, they’ll hesitate thinking, ‘I don’t want to go in a nursing home … because everything becomes … a nursing home.’ We won’t want that. So, what I love about active adult is it’s a transition between middle age and getting older. A story I was involved with recently was an interview with the developer of Jimmy Buffett’s Margaritaville.
“That’s a really good brand in terms of where I think we’re headed. It’s an example of the importance of consumer-focused development, lifestyle branding. I’m not saying everybody wants to get drunk at 3:00 in the afternoon, but a lot of them may want to, so they have that option.
“I think my generation are going to look for experiences. It’s going to be an attractive and differentiating theme. It’s going to be a happy place.”
It’s Not as Novel as It Appears
At this point, I should disclose that generational thinkers have consigned me and my contemporaries to that Silent Generation. What we would have liked to have had is not what Ms. Gray defines as “for the Silent Generation.” When we were her age, we would have loved what she is dreaming of for those of her era. It’s what a younger person imagines an older person wants.
Hey, I was in high school when generations were first spoken of in a Time Magazine article about a so-called “Silent Generation.” Before that, the social scientific era of generational categorization had not yet begun. Businesses innovated to meet human needs in general as they perceived them and as they, the businesses, saw economic opportunity.
Bankers, Developers, and Operators
The Interface Conference is about the business of senior housing. That’s different from how the industry started. Then, it was a condescending, needy oldsters notion. That idea of old age got the industry on a “charitable” nonprofit track. The notion was that old people were cute, needy, and subject to the “distress” of aging. The IRS bestowed tax exemption on “homes for the aged.” The Interface Conference is decidedly “for-profit.”
There are leaders who realize that the opportunity is in improving the lives of people generally while cushioning the transitions of old age. Others imagine that they are clever and have found an “asset class” with above-average returns.
In the long run, the prize will go to those who heed people like Kathryn Burton Gray, who are able to respond to what people want and to follow them to give them what they want as they age. That won’t be a spokes-and-hub model, to use Ms. Gray’s term for the centrality of public areas.
An optimized model will be differentiated to address the changing needs of people as they progress through the stages of aging. As people live longer and longer, there are several stages of aging among residents. The industry has yet to adapt its value model to address those progressions smoothly.
