All that glitters may not be gold…
By Steve Moran
I pulled this NIC chart from Twitter a couple of days ago:
I am not a NIC Map Subscriber so I am not listening on the subscriber call that is happening this morning but we can get some clues as to the data from the #NIC MAPData twitter feed.
The Good News
Occupancy was up 4th quarter over last.
Independent living occupancy is as high as it has been since 2007.
Assisted Living absorbtion is more or less keeping pace.
Rental rates continue to grow faster than expected.
And Yet . . .
New development gallops along with little or no restraint.
As properties get sold, prices are crazy high. This means those properties will have recordbreaking lease or debt payments and, in the case of lease payments, will have an escalating demand for cash flow.
There continues to be a strong aversion to moving into senior living.
Now The Economy
I am writing this article on Friday, January 15, 2016, and the economic news is not good. Oil prices/gas prices are dropping to unbelievable levels, while good for drivers, it is ultimately clobbering stock portfolios that translate into assets that are used to fund senior living stays.
While I don’t think we are even close to facing a disaster year for senior living, I do think it is going to be tough for a lot of communities and a lot companies.
Taking Advantage of It All
I am an optimist at heart. There are steps senior living communities can take to make these market instabilities work for them:
When doing new development, get an intimate knowledge of the marketplace. Understand what niches are underserved. Beyond that, look for niches that are being served but not served well. Even in 2010 when the market hit a historic low of 86.9% occupancy, there were communities that were killing it with respect to occupancies and cash flows.
For existing communities, figure out how to be unique/better than the competition. Be creative, be thoughtful, be bold, be brave. We have so much sameness in the marketplace that if you are creative and flexible you can beat the market averages every time.
Bring in outside consultants who can help you figure this stuff out. Sometimes others can see things you can’t. Spending $5,000, $10,000 or $20,000 for an outside opinion is a lot of money . . . except that one extra resident covers the expense in just a month or four.
Overpay your frontline staff and tell that you are doing it because you want your community . . . no scratch that . . . their community to be the best in the marketplace. Then fire those who don’t step up to the challenge. They will make a bigger difference than you can know, in getting and keeping your building full.
Figure out how to become great storytellers so that you make people laugh and cry about the amazing things you are doing in your community.
This is not easy stuff but it represents the difference between success and failure with the sledding gets difficult.
There is one other way you can make this all work better. Add the NIC Spring Investment Forum to your list of conferences to attend. Here is The Link.