There are any number of “first things to do” when planning a new development and the order is somewhat discretionary. However, up at the top of the list – perhaps even vying for the #1 spot is the market demand for your planned project. I mean, if there is no or insufficient demand, why take any other steps in pre-development?
A good and credible market feasibility study provides valuable information and supports project decision-making regarding: Go/No Go; Unit Mix Ratios; Pricing and Rental Rates; Overall Project Sizing; and Establishes the Project’s Geographic Market Areas.
To determine if there is sufficient market demand in the Primary Market Area (PMA) and Secondary Market Area (SMA), develop a Request for Proposals (RFP) and solicit several organizations who develop market feasibility reports. Compare proposals and get references.
Once you have selected a vendor, work closely with them to establish the PMA/SMA and make sure all competition and pipeline developments are to be included in the final report. The entire report research and writing process can take from 4-8 weeks depending upon the requirements outlined in the request and the report writer’s queue with other clients. After receipt of the report, study it closely and before issuing a final sign-off, question anything that is not clear or may require additional study for inclusion in a final version.
Should the study present a positive view of the market potential for your new project, you should further position your project for success by building no more than 25-50% of the reported unmet demand as your development target, assuming this also meets the financial goals of the project.
Taking a conservative approach rather than maximizing the potential can help to keep the community at higher census levels over the long term and is certainly better than not being able to achieve and maintain stabilized occupancy levels.
There might be a fair amount of anecdotal information that already leads you to consider expansion, such as currently maintaining high occupancy with a waitlist. However, this will not be sufficient to get lenders and investors to make funding commitments.
Additionally, you want to have high confidence that you can fill the new units. A reputable feasibility study can provide objective evidence of market conditions.
There are many skilled organizations that develop market feasibility reports, review their credentials for experience in senior housing reports and that they are HUD and USDA qualified should you consider those funding sources.
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Both first-time and seasoned developers of senior communities have turned to Grand Senior Living when developing new or expanding properties. Our services are comprehensive and provide a solid roadmap for the entire project team to follow.
Grand Senior Living provides expert assistance with design and selection of facility systems, equipment and services, support of feasibility and financing activities, development of operating programs, product definition and creation of startup schedules/budgets for staffing, purchasing and contract services.