During seniors housing construction boom, developers must get priorities straight
By Jerry Jaques
Ask just about anyone in seniors housing about being in the industry at this precise moment, and you’ll likely hear that it is an exciting time. Construction is on the rise, and it seems that everyone wants a piece of the seniors housing pie.
For the past 40 years, I witnessed many changes in the industry, but I have never seen such a shift as we’re experiencing today. The amount of interest in the industry is far greater than in past decades, and the need for veterans with expertise to help guide inquisitive entrepreneurs is paramount. More and more people are getting into seniors housing because the timing is right.
We receive a call at least once a week at Riverwood Retirement Management from either an investor or other interested parties who want to know, “Will this work?” I have to look at each case independently and consider various factors — location, concept, type of care, demand for services, financing model and staffing structure.
I find that I can offer the best advice to developers before the design phase ever begins. Newcomers in particular don’t realize that they must consider specifics that may seem like minutiae but can make all the difference in the day-to-day operations once the community is up and running.
Having an engaged management partner who is a part of the process from the beginning is most beneficial, especially to those who are venturing into seniors housing for the first time.
I’ve seen a lot of examples of what works and what doesn’t over the years. In addition to the calls we receive from those getting into seniors housing, we receive a lot of inquiries from owners, investors, lawyers and bankers who need our help to turn a community around.
I feel privileged to have spent most of my adult life engrossed in the seniors housing world, and after working with more than 65 communities over the years, I enjoy sharing my knowledge with others who need consulting or management services.
Industry risks overbuilding
I see a real potential for a seniors housing oversupply, especially in assisted living.
Just because a particular location is a hot spot for retirees or construction doesn’t mean that the demographics can support another community. There is a misconception that if you build a community, the residents will flock to it.
Baby Boomers are just now entering their 70s and are staying more active. The average age of an assisted living resident is in the mid-80s. The need for an increase of assisted living communities may not be there for another 10 to 15 years, and yet we see a lot of new construction occurring.
Before getting into a market, really dig deep and truly analyze the demographics, growth and current or future competition for assisted living and/or memory care in a particular area. We are noticing a real building boom in parts of Texas and Florida, among other locations.
In addition, take acuity into consideration. As regulations are shifting toward allowing assisted living communities to offer additional clinical services, we are going to see higher acuity residents in the assisted living environment. Those communities that plan for this by making sure that they can offer the services required for those residents will have a definite competitive advantage in the coming years.
Details matter
A wide range of elements can truly make or break a community. If you design incorrectly or, even worse, start building a community that goes against the industry standards, it can be challenging or costly to correct those mistakes.
The logistics and operations of a development need to be evaluated in every aspect of the design phase, so it’s best to seek consultation from the beginning. Engaging an experienced management company in the beginning will yield tremendous benefits.
For example, it is critical to make sure that the design lends itself to the most cost-effective staffing ratios. Everything must be within visual range, and staff members have to be able to see the individuals they’re caring for, especially in memory care.
The number of floors in a building is of extreme importance when considering resident safety because an emergency might require an evacuation.
The placement of common areas and the distance between those spaces and the resident apartments are critical factors. Residents in assisted living or memory care cannot always travel from point A to point B, so the proximity is crucial to consider. Therefore, the length of the hallways becomes increasingly important with an older, more acute population.
There are countless details that truly make a community senior-friendly.
Lessons learned
Building or operating a seniors housing community is so much more than making a good investment. In order to succeed, you have to genuinely care about the senior population and have a true passion for positively impacting their lives.
For instance, we have heard from developers who don’t understand why there’s a need for an activities director. They look at the expense, rather than the residents’ need for quality lifestyle enhancement and wellness programs that this individual provides.
This isn’t just a business transaction; this is an actual home where consideration of what is best for the residents should always come first. From my years working in this industry, I know one thing for sure: All decisions should be made with the senior population in mind. If they aren’t the focus, then it’s a recipe for failure.
I have learned a lot over the years and can confidently say that I understand the recipe for success. Above all, there is one common thread in all of the communities that I have aided on the road to full occupancy — a team that genuinely cares about seniors and puts their needs first.
My personal goal is to have a positive impact on seniors and improve their lives. When we team up with owners, sponsors and board members that share that same vision, the rest all falls into place.