Recent data has pointed to overbuilding in some markets. It is therefore vital that senior housing providers take a more disciplined and strategic approach to development. The decisions made today will determine whether or not a company will thrive in the future. Success in a new market requires not just an eye on the current senior housing market and resident, but an eye on the future of senior housing, as well. Mark Rockwell, principal of Anthem Memory Care, explained that it starts with the right market. “You will live or die by your market selection. You can’t operate yourself out of a bad market…It’s more foolish than ever for operators to assume they will win a large share of the market just by being a better operator than the competition” Rockwell also mentioned that it is possible that one area of a market may have an unmet need, while just a few miles away in the same market area there is an oversupply. Location selection and market research are therefore essential to the future success of a senior housing community.
Rockwell also explained that “while great care and operations are certainly an advantage, it will not get you a full building if there are no residents who want to move in.” Rockwell’s company, Anthem, performs focused and diligent market research prior to making the decision to develop in any given market. One of the most important aspects of Anthem’s market research is the local labor pool. Rockwell says that Anthem has passed on a couple development opportunities that could have tapped into an unmet need because qualified staff was difficult to come by.
Another important aspect of a new senior housing development project is choosing the best possible partner. As the senior housing market stands to become increasingly saturated as in the next few years, it is vital to select partners that know the industry. Many real estate companies with little to no experience with senior housing are entering the industry to capitalize on increased demand. This has come with an unintended consequence – a new level of risk. Working with a partner that does not know the senior housing industry can endanger the residents as new operators live and learn.
Kathryn Sweeney of Blue Moon Capital Partners says that “The right partner should be knowledgeable and preferably cycle tested,” Sweeney said. “Not every deal will go according to the pro forma—hopefully it does better. But if not, you want the right partner to stand by you through the ups and downs.” Mark Rockwell also explained that it is ideal if management is knowledgeable enough to participate in the design of the community and its operations. “Senior housing is not a real estate business. It is providing care and attention to seniors, especially as you go up in acuity. Individuals who come in and are not focusing on the operational aspects of the community will likely have serious problems.”
Let Cambridge Realty Capital be your partner in your next Senior Housing development project. We are financial experts, but we have the unique element of an exclusive focus on senior housing and healthcare projects. Contact us today to understand just how much of a difference choosing the right partner can make.