In recent decades, many senior C-suites associated growth with risk. Aggressive growth seemed to conflict with the nonprofit obligation to protect the interests of your residents and the integrity of your mission.
These days, growth is virtually a necessity if you don’t want to jeopardize your nonprofit mission. Pursuing growth is not so much aggressive and opportunistic as it is being faithful and committed to serving that mission and to the exploding number of potential future residents.
Particularly for aging communities, protecting the interests of residents requires modernizing infrastructure and adding new and better amenities. For communities of all ages, the rapidly growing senior population will soon leave large numbers of typical Life Plan Community candidates unanswered.
Based on demographic data reported by NIC and convincingly described by Dan Hermann of Ziegler [linked]all relatively full Life Plan communities will lose significant market share to for-profit competitors by 2024 unless nonprofits embrace growth without delay. The question becomes: where are you looking?
Fortunately, there are plenty of opportunities in most markets if your organization takes steps to understand population dynamics and the competitive environment.
Population dynamics and market attraction: “We no longer live in the 80s, 90s and 00s”
Beyond raw population growth, certain areas in your market may have a viability that hasn’t existed in recent years.
For decades, conventional wisdom and common experience have suggested that 70% to 80% of the residents of a Life Plan community moved within a 10-mile radius. In recent years, our market studies have consistently shown that a greater number of residents are moving from further afield, so that 60% to 70% are now the usual draw within a 10 mile radius. Communities in particularly retiree-friendly regions like North Carolina see 55% to 65%.
This is good news when it comes to identifying potential expansions and identifying locations for new communities that once looked untenable. National changing trends and a rapidly aging society are turning marginal markets into now viable growth opportunities.
But while national trends can be useful guidelines, how can you know? your Can a specific location reasonably be expected to attract a greater number of people from outside the 10 mile radius? You can’t invest millions of dollars in an expansion or startup project based on a trend and a prayer. Fortunately, new data sources, which were not available 20 or even 10 years ago, now make this analysis possible. We now have access to the moving trends of a significant majority of your residents and those of your competitors based on public change of address data. This new data source has quickly become a must-have for any thorough market research. You can know with confidence whether or not your locations can attract 30% to 40% of residents from further than 10 miles.
Competitive environment: are you working with a puzzle piece or creating a sculpture?
Another way to think about growth opportunities in your market is to approach it with a “puzzle piece” mentality or a sculpture mentality.
As you explore opportunities to grow, do you have a clear mission mandate about the population you serve (e.g., socio-economic profile, affinity group, etc.) and a well-defined model that you can replicate? Then you have a piece of the puzzle (your mission mandate) and you look for openings in your market where that piece can ‘click into’.
For you, market research means identifying sufficient acreage surrounded by sufficient homeownership within a certain income profile. If your location meets these criteria, your project will be successful.
This is a valid approach and works well for many multi-site organizations. However, this approach can cause some organizations to miss out on highly viable opportunities that require more of a sculpture-like approach, which is more common in single-location organizations.
Many markets may be oversaturated in serving one senior profile (the puzzle piece described above) and yet significantly underserved at other levels. Organizations that are open to identifying and developing a product for these underserved niches can find tremendous opportunity. Think of your organization as a sculptor who shapes the desired product in the desired size and shape. For organizations with this flexible approach, most markets in America contain niches that will certainly be underserved in the coming year. For these organizations, market research means understanding the exact nature of their competitors’ product level, price level and growth plans.
Summary: Resolving the paradox of 2024 for a traditionally conservative field
Not-for-profit Life Plan Communities find themselves in a counterintuitive situation in 2024. Pursuing growth is now the risk-averse attitude to maintain market position. Delaying growth now jeopardizes the impact of one’s mission, as the impact of any stagnant mission will diminish over the next decade simply because the number of age- and income-qualified seniors grows so dramatically.
Whether you approach potential growth with a clear mandate for which market niche you want to serve, or whether you have the flexibility to serve any niche, the first step is a basic feasibility study, supplemented with the most current change of address data. .
Assuming a market exists, the next step is to understand the market in depth with competitive pricing and positioning analysis. These relatively small investments will allow you to create the right number and type of new homes that will keep your mission strong as the senior population in your market explodes.
