How do you know when it’s time to start a redevelopment or repositioning project for a community?
Value is the key to the future
By Rick Banas
Vice President of Development, Positioning
Gardant Management Solutions
Signs manifest themselves in a variety of ways and usually culminate in a significant drop in occupancy if ignored.
Signs include changes in what people are saying about the community, referral patterns, the reasons cited for not moving in, and competitive environment.
Two of the factors I believe will create the need for redevelopment or repositioning in coming years are the growing push toward managed care and all the indications that a significant percentage of Baby Boomers are ill-prepared financially for retirement. The focus will be on value and meeting needs versus wants.
Don’t wait until it’s too late
By Adam J. Kaplan
Founder & CEO
Solera Senior Living
It’s likely too late to start preparing for a redevelopment project if performance has started to slide or a new competitor or an expansion has been announced.
Strategic operators are proactive in planning for full-scale renovations every seven to 10 years in order to enhance the marketability, drive resident and family satisfaction and increase team member engagement.
Additionally, as part of the annual business planning process, the team should critically analyze the operations in tandem with the local market fundamentals to validate if the unit mix and levels of care are optimized.
Watch for performance dips
By Thomas H. Grape
Chairman & CEO
Benchmark Senior Living
The best indicators for when it’s time to revisit the positioning of a project are when we see occupancy declining, less enthusiastic feedback from customers, or new competitors opening that change the positioning of our project in a marketplace.
The changes we would consider would be whether we should revisit the pricing and unit mix or consider programmatic changes like converting units from one use to another (i.e. assisted living to memory care).
We may also reposition the community by forming strategic affiliations or by investing significant capital expenditure dollars to “refresh” the community to make it more contemporary.
Work on a regular schedule
By Ted MacBeth
Vice President, Director of Project Development
If your community hasn’t completed any type of redevelopment in the last five to seven years, you’re at risk of falling behind in your marketplace.
Proactive community leaders and boards of directors see the greatest success at maintaining and growing market share by planning ahead to meet and exceed consumer expectations. Don’t wait until your community experiences an operations challenge with declining occupancy or new competition entering the marketplace.
Your community should have a master plan in place with comprehensive steps plotting out your community’s future.
Change is perpetual
By Paul Chapman
Chief Development Officer
It’s really an ongoing process.
Communities experience a remarkable amount of daily wear and tear. We regularly self-inspect so that we can budget property refreshes before the community starts to look tired.
Changes in the competitive landscape can have some influence on timing, but it’s not the primary factor. We owe it to our residents to look fresh and to provide spaces that work for their lifestyles and interests.
When we do an update, we don’t just replace. We look at how the space is being used, what our residents like, longevity of materials and program needs, so that our buildings reflect our current programs and philosophies.
No ‘magic answer’
By Jacob Gehl
Senior Managing Director, Founding Partner
Blueprint Healthcare Real Estate Advisors
There is no one magic answer for when to renovate.
Many of our opportunistic buyers are purchasing older facilities and using renovation dollars to change the acuity level of the communities (converting independent living to assisted living, and assisted living to memory care). These conversions tend to offer some of the best yielding returns on renovation dollars.
Altering unit size by demolishing walls or creating smaller memory care units can have a dramatic increase in value given how memory care rates tend to be higher in comparison to independent living rents.
New supply in a market spurs changes
By Scott McCorvie
Senior Living Growth Advisors
Creating and maintaining a competitive advantage is extremely important in today’s seniors housing marketplace. This is especially true in markets reporting a large amount of new supply.
The new supply typically includes an enhanced design, amenities and interior finishes. However, a current community typically maintains an advantage in location and established reputation.
Surveying the competitive market on a regular basis is critical to making any redevelopment investment decision. If a community wants to maintain occupancy and annual rate increases, but is an outlier to the market in terms of acuity mix, unit types, amenities and finishes, it’s likely time for a redevelopment decision.
Adjust for Boomer preferences
By Michael Gordon
Vice President of Planning and Development
EPOCH Senior Living
While Baby Boomers are still over 10 years away from turning 80, they’re shopping for their parents and represent a shift in preferences.
Recent survey data on Boomers indicate that they view well-designed kitchens and bathrooms, onsite gym and outdoor spaces as key attributes for seniors housing. This could be a challenge for older properties. In many markets, the newer product coming on line is being absorbed and gaining a greater share at the expense of the older properties.
If not addressed in a timely manner, older communities will begin to face downward occupancy pressure from newer product coming into its market that better meet the needs of the Baby Boomers.
It’s always on the table
By Kevin Carden
Senior Vice President of Acquisitions
Owner-operators should always be considering redeveloping or repositioning their senior living communities.
They should regularly update their communities, and monitor their submarkets to verify their communities’ competitive position. They should also monitor other markets, real estate sectors and healthcare businesses for design ideas, new products/services and other potential competitive threats. The good ideas will find their way into the community’s submarket eventually, and the community has an opportunity to capitalize.
By monitoring the market, owner-operators will better understand when they need to act to protect or enhance their market position without an abrupt, massive redevelopment/repositioning.
Look at your competition
By Allen McMurtry
Cushman & Wakefield
Competitive market analysis is key, in my experience. Once one understands how a property compares to the competition, then one can make an informed opinion on when to reposition.
If the property is an older community alongside new, state-of-the-art competitors, unless you want to compete solely on price, it is time to reposition/freshen up. Even if the property is full, be proactive to maintain your position in the market.