| The Good | The Bad & The Ugly |
| Site Evalutation |
| | Conduct thorough on-site visit | | | Evaluate surrounding land uses | | | Assess availability of: | | | | health care services | | | convenience stores | | | | Highway Accessibility | | | Visibility | | | Character of neighborhood | | | Local perception of site | | | Impact on target market | | | | No site visit | | | No interviews with local key informants | | | Evaluation based on reviewing map only | | | Assuming that seniors will move anywhere & that site qualities doesn't influence target market | | | Taking the client's word for it | |
| Market Area Definition |
| | Based on detailed interviews | | | Consider psychological as well as real boundaries (highways, rivers, state lines, taxation differences, etc.) | | | Distance to health care facilities and their service areas | | | Relationship between site and perceived target market | | | May be influenced by sponsor's sphere of influence | | | Differences between rural, suburban and urban | | | | Using a radius | | | Not conducting local interviews | | | Ignoring natural and psychological boundaries | | | Ignoring the impact of perception of location on whether people will move | | | Not including a detailed rationale for how the MA was defined and why areas are not included | | | Taking the client's word for it | |
| Qualitative Interviews |
| | Doing them | | | Context for understanding quantitative data | | | Necessary for site evaluation, market area definition, perception of needs, perception of sponsor, familiarity with concept, acceptability of fee levels | | | Should cover representative organizations serving seniors | | | Provides feedback on how needs of seniors are currently being met | | | Provide information on positioning of competitors | | | | Not doing them | | | Limiting interviews to competitors and regulatory agencies | |
| Competitor Analysis |
| Existing Communities | | | Details on the following: | | | | Age | | | Location & Description | | | Owner/sponsor | | | Mix (levels of care) | | | Unit types/mix | | | Pricing & payment options | | | Services & Amenities | | | Occupancy | | | Market area draw | | | Resident profile | | | Marketing program | | | Physical plant description | | | Licensing | | | Expansion plans | | | Perception of competition | | | | On-site visit for anything other than preliminary analysis | | | Comparison of features and positioning Planned Communities | | | Sources to be contacted include: | | | | Each municipal zoning & planning office within & proximate to MA | | | Dodge Report | | | Existing competitors | | | Area Agency on Aging | | | Internet searches (local papers, public co's websites) | | | Developers | | | | Obtain information on exact location, project owner, description, zoning status, other approvals, financing status, development timing | | | | Assuming that older communities don't compete with newer ones | | | Assuming that non-profits don't compete with for-profits | | | Assuming that rental communities don't compete with entrance fee communities | | | Ignoring the possibility the residents in independent living may be receiving assisted living services | | | Assuming that competitors located just outside the MA don't compete with communities within the MA | | | Not contacting every local planning & zoning office (and thinking you got everything!) | |
| Demographics |
| | Assisted living analysis should include adult child market | | | Demographics should reflect the exact MA defined for the project | | | Condition of housing market(time on market, home values) | | | Trend patterns (growth of elderly, growth of adult child and general population) | | | Household income distribution | | | | Over-dependence on national statistics | | | Don't use questionable data source | | | Compilation of data without interpretation | |
| Demand Analysis |
| | Assumptions are defined and supported | | | | Opening year | | | Number of units | | | MA draw | | | Age at entry | | | Fee levels | | | Rent/income ratio | | | Minimum income | | | Full occupancy | | | Frailty levels (for AL) | | | | Quantifying Competitor Overlap re: | | | | Geographic draw | | | Pricing/affordability | | | Existing and planned | | | Status/Timing | | | | Factoring in qualitative information | | | Recognize that for AL, market penetration rates have many interpretations | | | | Reliance of 65-74 group (except for active adult) | | | Project is so "unique" is won't compete with others | | | Overestimating impact of competitors | | | Exclusion of competitors immediately outside defined MA | | | Incorrect calculation or interpretation of market penetration | |
| Finding/Conclusions |
| | Provides more than quantitative assessment of go/no-go | | | Recommendations should address: | | | | Overall community size | | | Size of each level of care | | | Type and mix of units | | | Market niche | | | Payment structure/fees | | | Services & amenities | | | Absorption | | | | | Not providing substantiation from report for recommendations | | | Only providing quantitative conclusions | |
| General Issues |
| RELATIONSHIP OF FINANCIAL ANALYSIS TO MARKET FACTORS | | | Development Costs are based largely on architectural program: | | | Market Study should provide guidelines for developing preliminary architectural program | | | Detailed program provides best approach to estimating construction cost | | | Pricing/Revenue | | | Competitor analysis helps assess acceptable price ranges, preferences for pricing strategies, and underserved niches | | | Absorption and Fill/Revenue and Operating Expenses | | | Forecast absorption rates reflect competitor experience, number of facilities attempting to fill, experience of marketing staff | | | Marketing costs are impacted by target market, type of project, regulatory environment, type/extent of competition and financing requirements | |
| OTHER ISSUES | | | Use qualified consultants with substantial specialized experience in seniors housing | | | Market studies should be done well before financing - they are a planning tool as well as a due diligence requirement. | |
