Articles of Interest


Vol. 4 .Issue 6 . Page 28
* The Smart Developer

Before you rush into the assisted living market, do your homework.
It’s the key to your success.
by Lee E. Cory


Most senior housing developers approach new projects backwards. They find a site and then try to justify why it would be perfect for an assisted living facility. But a smart developer identifies the market first; investigates the needs, preferences, desires, lifestyles and peculiarities of a specific target audience; then chooses a potential site and hires a consultant to perform a feasibility study.

Before even looking at land, you must define your market. The typical target audience for an ALF are seniors aged 75 and older with self care and/or mobility limitations and annual incomes of $25,000 or more. However, recent studies show that up to 65 percent of private-pay AL residents have incomes below that level, indicating that they have unreported sources of income.

Another important target market is seniors’ adult children (aged 45-64) with annual incomes over $50,000. Up to 80 percent of the residents living in private-pay ALFs or their adult children meet these age and income parameters and live within the primary market area, which is within three miles of the facility, unless otherwise demarked by natural or manmade boundaries, such as coasts, rivers or freeways.

Next, develop a basic project concept. Define the general size and scope of your development, including basic housing types and development pattern, facilities and services to be offered, resident interest (ownership, endowment, and rental), probable financing arrangements, and the ownership/operating structure. Identify a market niche that is potentially profitable and personally interesting.

Choose the community where the project will be located, and learn about the particular characteristics of the housing market, regulatory process and financial resources available in that marketplace. If research leads to a potentially profitable but unfamiliar market, you may want to partner with another local developer, management company or sponsoring organization. Local professionals, such as regional and local planners, representatives of organizations serving seniors, economic development agencies and realtors can also help you accurately define the primary market area.

To determine the feasibility of your project, you must also analyze all current and proposed competitive projects that may affect demand in your market. This has become increasingly complex in recent years because ALFs face a more complex array of direct and indirect competition. A trained and experienced analyst with some real world sense of operations and marketing may be the best person to realistically evaluate current and pipeline supply, and ultimately net demand in the marketplace.


Once you’ve determined that your project has a good chance of success in an area, you must choose a specific site. It should provide adequate land in a safe and attractive physical setting at a price that can be supported by the project’s rents and overall economics.

The best location for a senior housing project is in the center of a concentration of seniors or their adult children. When moving into a facility, seniors typically choose to stay within their own neighborhood, where they have friends, family, shopping patterns, cultural and social events, and other daily routines that they wish to preserve. It should offer convenient access to services such as public transportation, medical care, places of worship, banking, senior centers and shopping. Walking distance for most seniors is one-quarter to one-third mile.

To minimize opposition from existing community members, the facility must fit comfortably on the site and within the area. While we don’t recommend that a facility face a major busy street, it shouldn’t be so far from a major street that no one knows it’s there. Generally, you should be able to reach the facility by making no more than two turns off a major street, unless the site is close to a landmark or shopping center.

You must also review the site survey, which includes the legal description, property lines, streets, alleys, easements, utilities and flood planes of the property; a topographic survey, which outlines land grades and trees; American Land Title Association and environmental impact surveys; the geotechnical report, which shows foundation and paving considerations, etc.; and noise and traffic studies. Potential problems to watch out for include:

Easements. Utilities of other public easements could cross the site and render the land difficult to use.

Zoning issues. Building setbacks and parking requirements can provide a hardship to site development.

Right-of-way issues. Some of the streets might be scheduled for widening which could reduce the buildable area of the site.

Ownership problems. If the site has multiple owners, it could be difficult to get a clear title.

Utilities. Having to extend electrical, water, sanitary sewer, gas, or storm sewer services to the proposed site could prove costly.

Physical features. While many physical features may add valuable amenities to a site, they may also add development, mitigation or operating costs. These include: trees and other vegetation, steep slopes, utility lines, sun orientation, drainage paths, detention ponds, rock outcroppings, lakes and wetlands, problem soil conditions, prevailing breezes, street development or other off-site costs.

Lee E. Cory is president of Portland, Oregon-based Paradigm Senior Living, a professional services firm that develops, markets and manages senior living communities. He can be reached at .