It is the craziest thing, but the senior living market penetration rates are all over the board.
It is the craziest thing, but the senior living market penetration rates are all over the board. They range from 16% in Pennsylvania to 2% in Las Vegas and yet . . . if you had to develop in one of those two markets your chances of success would be higher in Pennsylvania than Las Vegas.
And . . . yes in case you are wondering, those market penetration rates are for age and income qualified elders.
When those numbers were presented, I probed the speakers on what they correlated to and they just don’t know. Specifically in Pennsylvania, high quality senior living has been around for more than 100 years so having elders move into senior living communities is more of the norm than other parts of the country. But each case seems to be different.
It is Frustrating
It is frustrating to me because it seems they should be able to figure something out . . . Some correlation with something that senior living developers could use to identify markets with unmet needs. I would even guess that ultimately they will find something. It may very well be a cultural comfort thing and that can only be uncovered with new research that is yet to be done.
The Good News
It is generally accepted that the national market penetration rate is in the neighborhood of 10% and has been there for a long time. This means that nationally, 90% of the age and income qualified elders in our country do not want, do not see benefit in, what we are selling . . . or at least enough benefit to spend their money with us.
Yet in my view this tells us that there is a HUGE unmet need. It suggests that it is actually possible to get to a national market penetration rate of 16%. Can you imagine the number of new apartments, of new communities it would take to get there? It would mean shorter fill-up times, lower marketing costs, higher occupancies, more profits.
It would also be better for the elders of North America. They would receive better nutrition, better socialization, better health and more great days.
From Here to There
The New ALFA is embarked on some really cool new adventures that will make the industry better and will improve the resident experience. I would like to suggest that they and LeadingAge, and NIC, and NCAL, as an experiment, do the following:
- Create a national campaign to tell the stories of senior living residents, about why they are happier, healthier and living longer in senior living settings.
- That they engage a documentary filmmaker to create a compelling story about living a vibrant life in senior living. That the film be exclusively about living life and not about care.
- That they put together a significant budget and do a trial run in one of the low penetration rate MSAs to see if they can actually move the needle.
I can envision a situation where, if they can make the case by telling the story and changing demand, a group of senior living providers would create budgets to do the same thing in other markets knowing that a rising tide means all ships float higher.