Conducting Market testing is easier said than done, but with senior housing construction rates near all-time highs, knowing the feasibility of a project is crucial. Having a clear, in-depth understanding of a market where a property will operate make the difference between a leased-up community and a struggling operator.
However, Studies that just scratch the surface are likely leaving some opportunities on the table, and deep dives into market research and analysis are important as the industry continues to become more competitive, particularly for new entrants in the space.
For a senior housing business to grow intelligently, market studies need to be done on an individual basis to target a specific area and figure out how to fill units, according to Lynne Moore, president of MDS Research Company, Inc. MDS is a consulting firm that conducts market feasibility and financial feasibility studies in the seniors housing and health care industries.
Studies need to take a look at the market area definition; demographic characteristics; competition; and the fit of the area, Moore said during a recent webinar.
While many market studies analyze the area within a circle radius, the area actually should be much more specific. For example, a market area should take into account natural and man-made boundaries and be more cognizant of zip codes rather than circle areas.
When looking at demographics of an area, businesses need to know how large their potential market is and if there will be continued growth in senior households. To reach those prospective residents, the market study should also take a look at the households headed by adult children between 45 and 65 years old.
Household income is one component of the demographic makeup that should be broken down to get a better understanding of nearby competitors. More specifically, not all nearby senior living communities could be considered true competitors, as pricing and care offerings can differentiate prospective residents based on income.
“We think it’s important that an operator and lending partners identify not just an itemized list of prospective competitors, but a sub-sample that are ‘true‘ competitors that are seeking to market to people in the same income and subject properties,” Daniel Hogan, director of research of RED Capital Group, LLC, said on the webinar. “If you don’t wean down the income to a relatively narrow respect, you may be missing opportunities in these growth markets that could prove fruitful.”
Capturing all these data points can be challenging, as one map will not have complete, accurate and current information. When doing market feasibility studies, it’s therefore important to take a look at several different maps and resources to put together a complete picture of the competitive environment.
Written by Amy Baxter
The post Why Deep-Dive Market Studies Bring More Senior Living Opportunities appeared first on Senior Housing News.
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