Emerging Trends in Operations, Development, and Repositioning a Power Talk by Good People With Kane Marshall: Greg Hunteman of Pi Architects, Nick Herrick of LCS, and Eric Johnson of Ziegler.

Westminster Expansion, Austin, Texas

Changing trends, some ongoing challenges, and cautious optimism are on the agenda for senior living industry leaders, and Pi’s Greg Hunteman and a panel of experts addressed all of these during “Emerging Trends in Operations, Development, Repositioning,” a Good People Power Talk program.

 Changing Trends

“A lot of what we are seeing is future residents wanting larger units – two bedrooms instead of one bedroom or efficiencies, so unit mix is important,” said Nick Herrick, vice president and director of development for LCS. He suggested the shift has gone from 70% two-bedrooms to 30% one-bedroom or efficiency apartments. This may mean taking some smaller units and combining them to create larger ones. At any rate, Herrick said, “You need to look at the unit mix if you’re looking at expansion.”

 Eric Johnson, managing director, of investment banking, and senior housing at Zeigler, agreed, adding, “We’re seeing a trend toward bigger units and cottages. We’re seeing a waiting list for larger units, and it’s a struggle to fill up smaller ones.” He further noted that while cottages were popular before the COVID pandemic, they are now more in demand than ever.

Hunteman observed, “We are seeing more yards on first-floor units and larger porches.” More than ever, people appreciate the connection with the outdoors and nature, he noted, and “most everyone wants a porch or balcony or some easy access to the outdoors.”

 There continues to be a growing demand for affordable, mid-market senior living; and more communities are offering rentals (with monthly costs of $2,500 or $3,000) versus an entrance fee model (with costs of $5,000 per month or more). At the same time, stressed Hunteman, “Residents still want amenities,” so communities have to strategize cost-effective ways of providing some basic amenities, such as flexible dining options and access to some wellness benefits. A la carté services and amenities give residents opportunities to personalize their living situation based on their needs, interests, and budget.

 That wellness is a growing priority among consumers isn’t new, but Herrick and Hunteman stressed the need to address this in creative ways that are both financially feasible and meet the demands of residents. Johnson noted that new weight loss products on the market have tremendous potential to decrease the number of health issues residents have due to obesity. He noted that there are studies showing the benefits of these drugs, including

Phase I Expansion and Renovation Westminster, Austin, Texas

Master Planning Phase I

enabling people to stay in the workforce longer and be more active and independent said Hunteman, to people coming into senior living more capable and engaged and seeking more wellness and social amenities. “If people come in healthier, they need less care and can be more active. They are more likely to be able to age in place longer with the support of some home health services.”

Hunteman noted, “We’re definitely seeing more active adult buildings. These often are multi-family buildings with more flexibility and appeal to the middle market.” This model is more resident-driven where people have more ability to pick and choose their services and amenities. This allows communities to attract younger, more active residents who need little care and support at first, and they can elect to receive more of these as time goes on, enabling them to age in place.

 Ongoing Challenges, But Growing Opportunities

Senior living owners and operators are still wrestling with issues such as inflation, seniors delaying moves out of their homes, and staffing shortages, but they are finding ways to address the trends and manage the future. The key to this is master planning. In essence, this involves developing/improving a community or building via a long-range strategic plan that balances goals and visions with financial considerations and budget limitations. It involves an array of team players, including the architect, contractor, and even the residents and staff, who work together to establish a blueprint for the future – what will happen and when, what the costs will be, and what benefits are anticipated. This is a living, breathing document that allows for revisions, changes, and redirection as the project gets underway and moves forward 

Herrick said, “We take a deep dive and facilitate a master planning process to ensure we align with the mission and needs of the client. We let them define what is important to them. We do this before we put anything on paper.” He added, “It’s critical to make sure we are aligned early and then collaborate throughout the process. We also need to consider financial feasibility up front, as well as a balance between revenue-producing and non-revenue-producing spaces.”

Hunteman observed, “When it comes to master planning, we believe in complete engagement. We work with clients to determine what they want, and we put something together that makes sense to them. We also get buy-in from residents. Collaboration across different stakeholders is so important.” He stressed, “It’s essential that everyone in the community gets a little something out of the process. This often means constantly going back on the pro forma and running the numbers so we get something that works for everyone.” In the end, said Herrick, “You get a blueprint that you can adjust over time, but you have something solid to start with.”

While healthcare services and amenities can be costly, more communities are finding ways to offer these. For instance, some are collaborating or partnering with home health agencies that have space onsite in the community. Some communities are offering their own home health programs with amenities such as exam/telehealth rooms and physical therapy suites. Another trend is more conversion of skilled nursing spaces to assisted living or memory care.  

Expanding can be challenging, especially when space is limited. However, there are solutions to this as well. “You may have some green space you can use to expand,” suggested Hunteman. He noted that he and his team are working on more satellite communities. “There is an opportunity to create satellite buildings that employ more of an independent living model. You can use the main community as a hub and build satellites around it,” he said. This allows communities to provide services and amenities to more people with different financial capabilities while maintaining a consistent brand.

Cautious Optimism

The growing focus on wellness has resulted in seniors who are engaged in their health and seeking to stay independent longer. “As you look at repositioning, you need to redefine things based on what residents want and what you can provide. This may be a little or a lot,” said Hunteman. He stressed that wellness isn’t necessarily “dollar for dollar” but can help with marketing and sales. He noted that technology, such as software and programs that enable residents to set up and manage classes and activities they want, and then track their progress, can go a long way to showing residents, potential residents, and families the advantages of the community’s offerings and their impact on health and quality of life.

All three presenters were cautiously optimistic about the future. Johnson noted, “The financing side is getting better. There is plenty of equity out there, though most are looking for distressed properties. But slowly the markets are improving.” Herrick added, “Just make sure you have marketing and financial feasibility in mind on the front end before you start any project.”

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