Tim Cassidy talks about how to take a safe approach to selecting sites for senior living development.
As a consultant, I have advised developers, builders, and operators in the implementation of what I refer to as the “smart approach” to senior living development. This “smart approach” simply requires that markets are diligently analyzed before any new development or expansion is considered. However, this simple, smart approach can feel stifling or frustrating in the face of this new wave of senior living development and potential opportunities. This wave of development will lead to many additional competitors in certain markets as capital resources and options continue to increase in the industry.
As a result, careful due diligence is required, beginning with a comprehensive senior living market and feasibility analysis. One essential aspect of a comprehensive market study that can’t be overlooked is the in-person interviews with zoning and planning officials in communities within the market Service Area.
I have found this conversation to be essential in the process of best assessing planned projects and their likelihood of development. The results of this meeting need to be factored into all penetration rates including stand-alone or collective consideration of independent living, assisted living and memory care. Plus, phone and face to face mystery shopping is needed to get a true sense of the competitors and their occupancy rates. Another aspect I’ve found essential as part of a comprehensive analysis is the practice of conducting due diligence in many markets in a region to select a combination of the best markets or even a single market. The benefit of casting a wide net is that it helps hedge for success in potential markets that may or not have a higher barrier to entry. Barriers to entry can include stringent licensing (such as in New York State) or the lack of available properties in affluent or anti-development communities.
This cautious approach isn’t just what I advise my clients to do, but what my own development company, Senior Consulting, LLC practices on a daily basis. Over this past year, we’ve expanded our development in New York State systematically by conducting 17 distinctive market studies in communities north of New York City. These studies have yielded seven distinctive markets with defined and substantial opportunities for assisted living, memory care, and in some cases, independent living.
As a result of these findings, Senior Consulting currently has several sites under contractual agreement and in the ongoing design and approval process. As we experienced another boom in senior living development, we will see markets that get over-built just as we did in the late 90’s. My advice for all developers, builders and operators in the senior living development space is to maximize the opportunity of this boom while minimizing the risk through due diligence, careful market analysis and implementing the “cautious approach.”
Feel free to contact Tim Cassidy for a free consult on your senior living development plans at [email protected].