- Market Area Definition. The site should be reviewed in relationship to major highways or other real or perceived boundaries, and substantive interviews should be conducted with local seniors to identify areas from which they would, or would not, be willing to relocate. This will help determine the area in which demographics need to be analyzed, identify the area where the competition is located and provide a focus for future marketing activities.
- Demographic Analysis. This should include an evaluation of current and projected trends in the population, households, income, housing values and housing tenure of the target market. Depending on the product, the focus should be on households in the 55+, 65+ or 75+ targeted age group. This will help provide a detailed profile of the target market, identify potential strengths and weaknesses in that market and provide a comparison of proposed pricing with existing home values in the area.
- Comparative Analysis. This should identify and survey current and future direct and indirect competition. Depending on the type of community being planned, this should include active adult communities, congregate housing, senior rental housing, assisted living and continuing care retirement communities. The characteristics and performance of the competition should be profiled in detail. This analysis will provide insights into the competition, including what is working well for them and what isn't, and will provide information on what to expect from future competition. It will provide information on absorption rates and feedback on how the market responds to existing pricing.
- Demand Analysis. This ties together the data that has been collected on local demographics and the competition. It will help determine the number of units that can be built over a period of time and enable you to test the impact of different price levels.
- Consumer Research. Optional, but valuable, this consists of local telephone or mail surveys to groups targeted by geography, age and income. This can provide further information on demand and absorption calculations, direct feedback from prospects on pricing and features and an initial list of leads.
By taking these steps, you can obtain valuable feedback that will enable you to refine your assumptions about the overall size, unit mix, pricing, amenities and absorption of your proposed development. These factors have a direct relationship to your pro formas.
In addition, the information obtained from a good study can be conveyed to your architect, marketing staff and lender.
Making changes at the eleventh hour — when you are ready to go to the bank — can be very costly. A detailed market study should be conducted early in the process, and it can be easily updated when it's time to report to your lender.
Studies for seniors housing communities are different than those conducted for traditional, non-age segregated real estate, and should be entrusted to professionals who have experience in the seniors housing market. Experience is critical to conducting a good market study.
The NAHB Seniors Housing Council can help by referring you to experienced consultants, or you can talk to other developers who have conducted market studies. Clearly describe your planned development to consultants and ask them for a proposal that describes the specific steps they will take and the cost and the timing of the study.
Susan Brecht is president of Brecht Associates, Inc., a Philadelphia-based consulting firm specializing in market analysis and strategic and development planning for the seniors housing industry. Brecht has worked with developments that include active adult for-sale and rental housing, affordable seniors housing and market-rate congregate care, assisted living and continuing care retirement communities. She is the author of "Analyzing Seniors Housing Markets," which was published last year by the Urban Land Institute, and she is a member of the NAHB Seniors Housing Council. She can be reached by e-mail or at 215-592-0254.
For more information on seniors housing or to join the NAHB Seniors Housing Council, click here. Or e-mail Jeff Jenkins or call him at 800-368-5242 x8292.
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