Assessing the Value of Your Expansion and New Development Options
“Should we add more units?” “Is there an opportunity to expand into memory care?” “Should we purchase that new acreage that just became available?” “Is our pricing strategy the reason we’re not meeting our occupancy goals?”
With today’s challenging economic climate and increasing competition for the senior living dollar, the precision of your community’s strategic decisions – and the information those decisions are based on – have never been more important. In an environment where profit margins are tight and in many cases razor thin, the margin for error is narrow and the risk of financial loss can be high. And in no case are the stakes higher than when you are considering the expansion of your present community or the development of an entirely new one.
Market Research Has Become a Critical First Step in Expansion and New Development Planning
Malissa Illiano, Senior Account Manager and Director of Market Research for SageAge Strategies, says, “Increasingly, astute providers are using a variety of research tools to take the guess work out of decision making and to optimize their likelihood of success when investing in growth and expansion projects. In the past 12 months alone, we have conducted market feasibility and demand analysis projects for more than 25 different senior living communities nationwide. For a minute percentage of a project’s overall cost, decision makers receive the information they need to make the correct call—whether it’s proceeding with the opportunity, modifying the plan or choosing to walk away.”
Market Feasibility and Demand Analysis Enable Laser-Like Decision Making and Strategy Development
Understanding the true potential of any market location for either expansion or new development is crucial to making the correct business decisions and allocating resources appropriately to optimize their potential. Today, market feasibility and demand analysis services provide a crystal clear picture of the potential of any market, which enables you to make accurate judgments on their value based on the projected return on your investment.
One prominent senior living enterprise that consistently uses research to minimize development risk and optimize return on investment is Clarity Pointe, owner-operators of memory care assisted living communities throughout the southeast. Prior to engaging SageAge Strategies for its market study efforts, Clarity Pointe used a non-industry market analyst and started development of its first community in Knoxville, TN. Soon after construction started on that project, Clarity Pointe was introduced to SageAge. Clarity Pointe then partnered with SageAge to complete market feasibility analyses of a variety of markets they were considering for development (among other services). SageAge helped guide Clarity Pointe toward markets with the best opportunities and away from a number of saturated markets that were on their “short list.” After a more than five year relationship – and assessments of more than 25 markets throughout the eastern U.S. – Clarity Pointe still turns to SageAge for reliable market study expertise.
Thomas Schaffler Jr., Vice President and Director of Real Estate Development at Clarity Pointe, says, “Over the past several years, SageAge’s reliable market feasibility efforts have been invaluable to the Clarity Pointe team as we worked to find the best markets to develop our communities and launch the Clarity Pointe brand. We have truly come to trust their market research expertise and depend on their keen insights for future planning. We won’t enter any new markets without their 100% approval!”
A 360° View Turns Uncertainty into Clarity
As a leader in senior living growth, SageAge Strategies provides a variety of essential market research services, including market feasibility, demand analysis and competitive assessments for both new start-ups and additions to existing campus offerings for the entire continuum of senior living modalities. As part of this offering, SageAge applies a comprehensive process designed to:
- Evaluate and define your primary market area, as well as the secondary market, taking into consideration geography, common traffic patterns and other relevant features for the area.
- Provide a detailed demographic analysis of the market area for your proposed services, including overall population, target prospects, growth rates, housing values and income levels.
- Identify and evaluate current marketplace competitive units in the primary market area and provide information on the number of units, estimated occupancy levels and pricing structures currently offered. This in-market competitive assessment also includes a review of the strengths and weaknesses of each competing community, a detailed review of the sales approach and effectiveness of the marketing team at each community, as well as a review of unit offerings and sizes, campus services and amenities. A detailed Competitor Analysis Spreadsheet is provided for easy comparison.
- Provide details on any other projects in the area that may be in the planning or early development stages by contacting key individuals from zoning and planning offices in the defined market area.
- Complete and present a detailed market demand analysis, utilizing all statistically relevant market data. The report includes calculation and analysis of market penetration rates to help determine opportunities in the market.
A Two-Step Process Offers You Maximum Flexibility
For the benefit of cost-conscious providers, we offer market feasibility and demand analysis services in two distinct parts. The first is a comprehensive “desktop” analysis of any and all information relevant to the project. The second consists of a very intensive and detailed in-market assessment that provides a firsthand perspective on such factors as competitors’ facilities, market perceptions, sales techniques and marketing tactics – all with an eye to rating the opportunity and identifying key areas of advantage for your project.
With this two-tiered pricing structure, providers have the option of using one or both parts. Malissa adds, “Some clients complete the desktop analysis and, if the information looks favorable, they will then drill down deeper with the in-depth marketplace assessment to further reduce their risk and to create an evidence-based strategy focused on identified opportunities and competitive advantage.”
In Part 2 of this series, we will take a closer look at how a variety of research tools can help an existing community to sharpen its current strategy and increase occupancy.
Proven Market Research Expertise is Available to Guide Your Growth Strategy
If you are a senior living community considering the need for assistance in evaluating opportunities for expansion on your current campus or the development of a facility at a new site, we encourage you to contact us for more information. SageAge Strategies is an award-winning strategic growth and marketing organization that operates exclusively in the senior living industry and was recently named one of Inc. Magazine’s Fastest-Growing Private Companies in America. For more information, please call or e-mail Adrienne Mansfield Straub at 570-601-1720 ext. 202 / firstname.lastname@example.org.
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