Q: How can a market scan identify potential markets for the development of new senior housing?
A: Although the senior living industry is still dealing with challenges, older adult demographic growth continues to be strong, and occupancies are predicted to reach the mid-90% levels by 2026. Everyone agrees there will be a need for more senior housing to address this demographic growth, and now may be the time to start planning for this growth and new development.
Many developers and operators have identified multiple market areas or regions of interest and are looking for a pragmatic approach to evaluate and prioritize these areas for potential new senior housing development.
The market-scanning task can be a cost-effective tool for evaluating multiple market areas for senior housing development through a quantitative analysis of several demographic and market metrics. The objective of the market scan is to develop a scoring system that will rank the market areas of interest in priority of potential opportunity for new development. This task also can be useful in identifying the potential need for specific living arrangements and/or identifying “opportunity clusters” for the geographic coordination of multiple projects within a regional area.
A demographic analysis for each area of interest would include an evaluation of the key older adult household age cohorts and adult children households. The demographic analysis also would address affordability by quantifying income-qualified households in each of the cohorts. The market-scanning task would identify the existing senior living supply and quantify the total number of units/beds in each market area. Other metrics also could be considered depending on the objectives and specific situation of each developer/operator.
The market-scanning task is purely a quantitative, data-driven analysis and does not replace a market study, which would be a next step in the overall evaluation of feasibility. Those are not the only metrics to be considered in the evaluation of senior housing, but they can provide initial insight into the supply and demand factors that indicate need for new Senior living products and services for planning purposes.
Lynne Moore is president of MDS Research Company Inc., a national senior living and healthcare consulting firm based in Fort Worth, TX, that has been serving clients for more 50 years. MDS is a two-generation company – she is following in Jim Moore’s footsteps. Ms. Moore is responsible for all MDS market research-related projects involving all aspects of senior housing and healthcare. Lynne Moore may be reached at (817) 731-4266 or [email protected].
The opinions expressed in each McKnight’s Senior Living guest column are those of the author and are not necessarily those of McKnight’s Senior Living.
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