Is your organization looking to begin a senior housing project, or perhaps expand existing services? As with any new project, proper planning can help mitigate your risks. A thorough understanding of the nature of the market is critical not only to obtain funding for your project but to increase your chances of success. A senior housing market analysis is a vital first step to ensure that you are headed in the right direction. But you may be wondering, exactly what is a market analysis, and what information can it provide you?
What is a market analysis?
A senior living market analysis is an important element in the initial phase of your due diligence process. It is designed to provide answers to your question-“does this project make sense?”. A market report represents a worthwhile (and quite sound) investment and should be viewed as an insurance policy for your project. In the same way that an insurance policy can insulate you from poor or even catastrophic events, so can a market study. It will give you insurance and assurance that your project makes sense. Look over some samples of Assisted Living and Skilled Nursing developments.
Benefits of conducting a senior housing market analysis
Whether you are planning a new development or looking to expand your senior care operations, you need to have a thorough understanding of the market and have a specific plan in place. A senior housing market analysis is definitely a good place to start and can help you do this in the following ways.
- Understand market conditions. Whether the market for your new project is one you are familiar with or a new one, you owe it to yourself (and your project) to understand the present state of the market. Things can change and change rapidly. So, before beginning a new project, you’ll want to fully understand what is happening around your project. A market analysis can provide you with pertinent intelligence you need to properly vet your venture.
- Recognize your area characteristics. One of the most critical areas is understanding the demographics of your geographic area. A senior living market study will give you geographical specifics including population, age and income statistics as well as market trends. Gaining an understanding of your potential resident base and where they are coming from will be vital for the future success of your enterprise.
- Know your competition. This is a key element of a market study. A substantial amount of useful information can be obtained by having a thorough understanding of your potential competition. Data such as price points, physical plant characteristics, lines of service and occupancy can reveal valuable information about the current state of the market. When conducted by a trained and experienced professional, competitor visits can reveal additional, less obvious information that will be useful to you as you plan your new endeavor.
- Set the bar. A well-done market analysis will give you a thorough understanding of your competition and the market through the eyes of an experienced and expert third party. Once you have this knowledge, you will understand the “bar” set by the market. With this understanding, you are in a much better position to properly design, plan and execute your new project with the greatest potential for success.
- Financing. To obtain financing for your project, most lenders will require a thorough market feasibility study to be conducted by an expert third party before approving any loans. Most lenders want an objective study that affirms the potential for the success of your project. A senior housing market analysis will help you build your case.
What’s in a market study?
These analyses can come in many and varied sizes, components and approaches but here are some key elements.
- Demographic analysis – the identification of the market area for the project assists in dictating several factors. Population, age, and income demographics should be identified with specific cohorts that will be affected by the project. Demographic trends can also be a part of this analysis.
- Competitive inventory – specific competitors in the market place should be determined and a full analysis conducted on each competitor. This analysis is essential as it can establish the standards that your project must meet or exceed in order to successfully compete in the market place. Also, to the trained eye, this investigation can turn up many key observations that will prove useful as you plan, design and execute your project.
- Demand analysis – the purpose of demand analyses is to demonstrate the need for the project utilizing one or several methodologies. Our firm typically employs at least three methodologies to confirm the demand which in turn serves to corroborate the conclusion. While this analysis tends to be mathematical in nature, it should be supported by the observations and analyses of the entire market study.
- Recommendations – a properly conducted market study usually unfolds a story that ultimately concludes with a determination of the need for the proposed project. When performed by experienced professionals, the market analysis will yield several important and useful recommendations that will affect the design, planning, and operations of the project.
Senior housing market analysis and future trends
Aging baby boomers are altering the landscape of the demands and expectations of senior living. The new senior population is going to expect more varied and higher quality amenities. Baby boomers desire choices and activities tailored to their individual wishes. To stay competitive, senior living facilities will need to meet their residents’ needs with varied amenities and increased quality of life.
The U.S. senior population is increasing. The U.S. Census Bureau reports that by 2030, the Baby Boomer generation will have aged to 65 years and beyond. This means that one in five U.S. residents will be at retirement age. The population will be transformed, growing at a slower pace. The Census Bureau predicts that for the first time in U.S. history, older adults will outnumber children. The oldest of the baby boomer generation is beginning to turn 75 years old, the population cohort that is likely to begin considering senior housing/living accommodations.
Despite the seemingly positive population trends we are seeing, not all markets are created equal. An aging population does not necessarily equate to a successful senior housing project. “If you build it, they will come” is not a mantra that is valid in today’s world. Any investment in a new venture whether it be an addition to an existing operation or a totally new enterprise must be preceded by a thorough and detailed due diligence process. A senior living market study performed by an expert third party is an absolute must in your project planning.