Developing a new Life Plan Community, or planning a significant expansion of an existing one, always comes with challenges. However, in today’s high-cost construction and labor market those challenges are greater than ever. Ultimate success depends as much on adequately meeting seniors’ growing expectations as ensuring projects are on time and on budget.
While we used to say that our communities appealed to the top 30% of the market, today we more realistically are targeting the top 15% with any new product. But that doesn’t mean our market is necessarily smaller. There are so many boomers coming into the market that there are plenty with enough money to afford our communities. What we need to remember, though, is that these are people that have choices of how to spend their retirement years and address their health needs, so to persuade them to move to our communities we have to ensure we offer them something they can’t get anywhere else. And that’s the bottom line: If you don’t make your community appealing enough to today’s affluent and informed senior consumer, it won’t sell.
Watch the recording of our webinar to learn more about how Life Plan Communities can successfully prepare for growth in 2024.
In our December 14, 2023 webinar, John Spooner, Co-CEO of Greystone Communities, Ziegler President and CEO Dan Hermann, Ohio Living CEO Larry Gumina, and Love & Company President/CEO Rob Love shared their insights on how to plan for growth in 2024.
The Five Keys to Building or Expanding a Life Plan Community
When developing a new senior living community or expansion to ensure it sells in today’s market, Greystone prioritizes five key aspects.
- Make sure it’s a service-rich, choice-driven environment.
If we’re targeting the top 15% of the market—which the higher entrance fees and monthly fees for new product requires—we must offer a service-rich environment with plenty of choices. Greystone is building massive fitness centers and creating large outdoor living spaces. We are offering multiple contract options. And, of course, dining needs to be exceptional, with a wide variety of venues from which to choose.
- Focus on independent living.
Many Life Plan Communities are struggling to generate good margins. Boards need to be focused on developing product that has the highest margins, and that’s typically independent living.
- Develop only enough healthcare to serve your own residents.
This is the flip side of number 2. Higher levels of care, especially skilled care, just do not generate margin in today’s environment. Building large healthcare facilities that have to rely on direct admissions is a recipe for future challenges. You do not want to have to compete for assisted living, memory care or skilled care residents.
- Make sure the residences are large.
The way that today’s customers live in our communities is different. They are spending 80% of their time in their residence and 20% in the community. This means that we need much larger residences than before, with room for different living spaces within each home.
- Ensure all of the offerings are high quality.
There is always someone that wants the best option in a category, always someone that wants the Mercedes. That’s what we see with the new communities we develop: The first generation tends to be those buyers who are seeking high quality.
The Potential for Satellite Communities
While most of Greystone’s development work is focused on developing new Life Plan Communities or expanding existing campuses, I would also like to share some insights on developing satellite communities. These can be especially important growth opportunities for landlocked communities that are seeking some ways to offer more high-margin products and services.
Greystone has had success developing two satellite communities and has learned some important things along the way.
- In the selling phase, we do experience some pushback from prospects about healthcare being at the “mothership” and not on the satellite campus. But then, as we all know, the prospects all come with the notion that they will never use the long-term care anyway.
- Satellite communities tend to compete more directly with 55+ communities, not Life Plan Communities. An important part of being successful competing against the 55+ market is to offer a product that is competitive today, but then offers something better—the hospitality services and long-term care at the “mothership”—as the resident gets older.
There are many opportunities to grow communities in today’s market. Whether a Life Plan Community extends its mission through starting a new community, expanding at its existing location or launching a satellite, the key is to develop a product that truly offers more and different choices than the typical community. This will create a value that supports today’s higher price points.