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Lay the Groundwork for an Active Adult Community
 Builders entering the active adult market frequently want to know what crucial steps need to be completed prior to opening an active adult community.
To help them determine what these steps are, my company conducted a survey of many of the nation’s premier developers and builders of active adult communities. The first question on the survey asked “What steps do you take prior to entering a new market?”
The results were presented at the Seniors Housing Symposium outside Washington, D.C. earlier this year and may prove beneficial when planning your next active adult community.
Here are the findings — what's truly important to accomplish before beginning a new community — according to some of the more successful developers of active adult communities:
Initial Research Is Key
First, the respondents were in agreement on the need to conduct in-depth research on everything from what services would be available to demographics, market trends, local politics and more.
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Services: They stressed the need to determine the availability of all key services — major medical, police, fire, emergency and educational opportunities — as well as personal services like dentists, optometrists, dry cleaners, hairdressers and the like.
- Infrastructure: The respondents also indicated that they investigate both current and proposed infrastructure.
The successful builders of active adult communities said they look at existing and proposed transportation corridors and routes and public transit as well as at current site access and marketing windows and how the marketing might change once the community is open and for sale.
If any of these factors is not “up to snuff,” they said they consider available alternatives and other viable solutions. Their intent was to always be in a position to achieve the greatest market acceptance as early in the sales process as possible.
- Demographics, Psychographics and Economics: It was important to the respondents that they understand all migration patterns, both in and out of the designated area, and the reasons for these patterns. The demographics and psychographics for the area are also looked at in depth during this stage.
They indicated that they also they research the current economic profile of the area as well as the anticipated direction of its economic future.
Respondents consider this vital information in their decision regarding the future viability of the community when planning to enter a market. According to their responses, they also look closely at the characteristics of the particular location, and how those characteristics can benefit an active adult community.
- Proximity to Nearest Metro Core: As part of their research, respondents look at the location’s proximity to the nearest metro core. They also consider the distance to major transportation — airports, freeways, train stations and buses.
They also consider the location’s proximity to shopping, retail centers and cultural activities.
They also consider trends in health models and weather patterns, as these are sensitive and important issues for this buyer profile. Active adult buyers can be very selective about where they live, and many will avoid a particular location when one or more of these factors are missing.
- Local Politics: Another aspect considered prior to entering a new market is a profile of the local politic of the municipal and county governments, the respondents said. Being able to gauge the local receptivity to a proposed community is obviously important.
A cooperative political environment is certainly more conducive to a successful, cohesive community and to a more profitable venture for the builder.
The survey respondents indicated that it was also important to meet with local planning departments to determine what upcoming projects may be in the pipeline in order to become more aware of potential future competition.
After Initial Research, a Definitive Market Study
If the above factors prove acceptable for a potential community, the respondents said, they then would conduct a definitive market research study in order to identify the potential product they would offer and the features and specifications they would need to include.
The market research would examine potential pricing scenarios and include absorption/demand analysis.
Many respondents said they engage full focus groups to determine consumer preferences. In addition they all evaluate the competitive resale market for both average price and duration of listings on the market, as these homes often provide formidable alternatives for the active adult home buyer.
New home construction is also studied for both price and absorption levels.
Studies Complete, It's Time to Sell
Once the entitlements are complete, the respondents said, they begin pioneer pre-selling to gain momentum. Those already building within the same market area indicated that they also contact their existing customer base to pursue potential referrals.
Community and Lifestyle First
Much of the early focus for these builders of active adult housing is no different than for traditional communities — with one exception. They uniformly agreed that, unlike more traditional home buyers, active adult home buyers look first for a community and lifestyle, and only after that do they shop for a home that will satisfy their needs and desires.
The knowledge gained through research and market studies should converge into a total program specifically geared toward this buyer profile in order to ensure success. This buyer profile first buys what they want ― the lifestyle — then they buy what they need ― the home.
Manny Schatz, MIRM, is founder and principal of Professional Builder Services, Inc. (PBS) in Danville, Calif, which trains and guides home builders in marketing, sales, sales management and construction management activities. Schatz has been involved in nearly every aspect of home building for more than 30 years. He holds a general contractor license, a brokers license and is a member of the Institute of Residential Marketing (MIRM) and has been a featured speaker at the Urban Land Institute, PCBC, the International Builders’ Show, the Sales and Marketing Council (SMC) and other industry events. Schatz is a life director of the California Building Industry Association (CBIA), past chairman of the National Sales and Marketing Council (NSMC) and a trustee of the IRM and the NSMC. He has served as president of his local HBA and SMC as well as PCBC.
For more information, call Schatz at 925-837-1937.
This article has been condensed from its previously published version in BUILDER DIGEST of California magazine, for which Manny Schatz writes an ongoing column.
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