In decades past, many senior living C-suites associated growth with risk. Aggressive growth seemed counter to the not-for-profit imperative to protect the interests of your residents and your mission’s integrity.
Today, growth is virtually an imperative if you want to avoid risking your not-for-profit mission. Pursuing growth is not so much aggressive and opportunistic as it is being faithful and committed to serving that mission and to the exploding number of potential future residents.
For aging communities, specifically, protecting the interests of residents requires updating infrastructure and adding new and better amenities. For communities of any age, the rapidly increasing senior population will soon leave vast numbers of typical Life Plan Community candidates unserved.
Based on demographics reported by NIC and compellingly described by Ziegler’s Dan Hermann [linked], any relatively full Life Plan Communities in 2024 will lose significant market share to for-profit competitors unless not-for-profits embrace growth without delay. The question becomes: Where do you look?
Fortunately, opportunities abound in most markets if your organization takes steps to understand its population dynamics and its competitive environment.
Population Dynamics and Market Draw: “We’re Not in the 80s, 90s and 00s Anymore”
Aside from raw population growth, certain areas in your market may have a viability that did not exist in years past.
For decades, conventional wisdom and common experience suggested that 70% to 80% of a Life Plan Community’s residents moved from within a 10-mile radius. In recent years, our market studies are consistently finding that a greater number of residents are moving from further away, such that 60% to 70% is now the common draw from a 10-mile radius. Communities in particularly retiree-favorable regions like North Carolina are seeing 55% to 65%.
This is good news in terms of identifying potential expansions and identifying locations for new communities that may have once looked untenable. National moving trends and a rapidly aging society are turning the fringe markets into now-viable growth feasibility.
Still, while national trends may be helpful guidelines, how can you know if your specific location can reasonably expect to draw a higher number of people from outside its 10-mile radius? One can’t invest millions of dollars in an expansion or startup project based on a trend and a prayer. Fortunately, new data sources, not available 20 or even 10 years ago, now make this analysis possible. We now have access to the moving trends of a significant majority of your residents and your competitors’ residents based on public change of address data. This new data source has quickly become a must-have for any thorough market study. You can know with confidence if your locations can or cannot draw 30% to 40% of its residents from beyond 10 miles.
Competitive Environment: Are You Working with a Puzzle Piece or Molding a Sculpture?
Another way to think about growth opportunities in your market is to approach it with either a “puzzle piece” mentality or a sculpture mentality.
As you explore opportunities to grow, do you have a clear mission mandate on what population you serve (e.g., a socioeconomic profile, affinity group, etc.) and a well-defined model to replicate? If so, you have a puzzle piece (your mission mandate) and you are looking for openings in your market where that piece can “snap in.”
For you, market research involves identifying sufficient acreage surrounded by sufficient home ownership amongst a certain income profile. If your location meets those criteria, your project will succeed.
This is a valid approach and works well for many multi-site organizations. However, this approach may lead some organizations to pass over highly viable opportunities that require more of a sculpture-style approach, which is more common among single-site organizations.
Many markets may be oversaturated in serving one senior profile (the puzzle piece described above) and yet significantly underserved in other levels. Organizations that are open to identifying and developing a product for these underserved niches can find tremendous opportunities. Think here of your organization as a sculptor shaping its desired product to whatever size and shape it needs to be. For organizations with this flexibility of approach, most markets in America contain niches that are certain to be underserved in the coming year. For these organizations, market research involves understanding the exact nature of their competitors’ product level, pricing level and growth plans.
Summary: Solving the Paradox of 2024 for a Traditionally Conservative Field
Not-for-profit Life Plan Communities in 2024 find themselves in a counterintuitive situation. Pursuing growth is now the risk-averse posture to maintaining one’s market position. Delaying growth now puts the impact of one’s mission at risk since any stagnant mission’s impact will decrease over the next 10 years, simply because the number of age- and income-qualified seniors is growing so dramatically.
Whether you approach potential growth with a clear mandate for which market niche to serve, or whether you have the flexibility to serve whatever niche presents itself, the first step is a basic feasibility study augmented by the most up-to-date change of address data.
Assuming a market exists, the next step involves deeply understanding the market with a competitive pricing and positioning analysis. These relatively small investments will equip you to craft the right number and the right type of new residences that will keep your mission strong as the senior population explodes in your market.