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As Senior Living Market Conditions Shift, Small Home Models Keep Gaining Momentum

The small-house senior living trend is only growing — and a handful of trends are helping to shape how the product type is evolving.

Interest in small-home senior living has swelled in recent years and operators and developers have entered the arena with a bevy of new designs and philosophies. Small home senior living gained even more traction due to the Covid-19 pandemic, as these models made it easier to keep infection rates low while still allowing the resident cohorts to socialize.

But small homes continue to gain momentum even as vaccines have brought infection rates down across all types of senior living communities. In the current staffing crisis, small homes offer advantages on the labor front. Changing consumer expectations — including eco-conscious living, and the desire for more homelike but still professionally run communities — are propelling the small home trend. Financing is also becoming more accessible for small home projects, including through franchise models. And the ability to adapt small home designs within highrises aligns with a return to urban living after the pandemic-driven exodus from city centers.

As the name implies, small home senior living generally has taken the form of household-style communities with up to 16 beds. Historically, they have belonged to one or a small group of owners, and were located in residential neighborhoods — sometimes, even in former residential homes.

But this is no longer the only form these kinds of communities can take, and in 2022, the concept includes not just

mom-and-pop enterprises, but an increasing variety of owners and operators.

“Small households are here to stay,” said HKS Architects Principal Grant Warner. “They’re so flexible.”

Franchising: a vehicle for growth

Franchising is not a new concept in the senior living space. But for small-home operators, it represents one of the biggest ways the sector is evolving and growing. With franchise models, many different stakeholders can bring about their vision for senior living communities without the need for as much centralized oversight.

Two companies in particular — BrightStar and Majestic Residences — represent a leading edge for the trend. Both are looking to grow in the months and years ahead, with Majestic having awarded over 30 franchises across the country and in the Dominican Republic since its founding; and BrightStar still building its network of small-house communities since launching the BrightStar Care Homes franchise concept with a handful of homes in March.

Both companies also know a thing or two about growing a franchise model. Majestic Residences CEO and Founder Chuck Bongiovanni was co-founder of senior living placement service CarePatrol, which operates on a franchise model; while BrightStar has long looked to “crack the code” on franchise-based senior living.

Since 2020, Bongiovanni and Majestic Residences have grown thanks largely to aggressive property acquisition and branding, Bongiovanni said.

Majestic’s franchisees are looking to scale, both through development and by buying existing small-home communities and converting them into franchises. And through the rest of this year, Bongiovanni said he expects more existing small-homes — and even some conventionally sized communities — to consider selling their businesses to owners who will turn them into more franchises.

“We’re seeing a lot more of our franchisees having interest in already running a home and getting licensed quickly,” Bongiovanni said.

Housing prices are also having an impact on the ability of small-home franchisees to scale up.

“It’s actually easier to get a franchisee to get a loan over $2 million for $1 million,” Bongiovanni said. “Banks want that bigger investment.”

As it grows, the business is becoming more sophisticated. While it was commonplace for owners of small-house communities to also operate them as caregivers, in recent years, that has changed — which Bongiovanni called “a major change.”

“When I used to bring families to care homes to look at them, they used to love that the owners worked in the home,” he said. “Now…they don’t want the owners being burned out, they don’t want the owners working 10, 12, 14 hours a day.”

The availability of properties coming out of the pandemic is even stretching the boundaries of what would be considered a small-homes concept, with Bongiovanni noting that there’s been recent opportunities to purchase mid-sized communities able to accommodate 20 and 60 residents.

“At that point we’re kind of getting into that other realm of smaller communities,” he said.

At BrightStar, franchisees have the ability to build up to three care homes under one franchise agreement, according to Chief Development Officer Pete First. That is also helping to propel growth, and the company has fielded many inquiries from prospective franchisees in just the two months since launching the brand.

Although construction and development costs have made new projects complicated, First added “it’s about finding the right opportunities that fit our plan.”

The senior living industry’s workforce shortage could also help accelerate growth of the product type, as small-home communities require fewer workers but typically carry tighter staffing ratios than their big-box counterparts.

“You can maximize caregiver staff and your administrator and your key positions within an administration with that type of scale for smaller, eight to 12 bedroom homes,” First said. “This type of care environment is really attractive to the caregivers.”

Communities thrive on connection

The concept of smaller pocket neighborhood concepts within larger senior living communities isn’t new, but operators are finding new ways the spaces are paying dividends by boosting resident wellness.

Two projects, The Oaks At Rose Villa in Portland and The Courtyards At Lowman, centered on interconnectivity, affordability and green space, with RLPS Architects having a hand in both designs.

The Oaks at Rose Villa includes 12-cottages that are stringently environmentally-conscious residences with a central green space, while for The Courtyards, Lutheran Homes envisioned a middle-market product with two pocket neighborhoods consisting of 10 homes each.

“Socially, the concept of the neighborhoods is so beneficial for residents,” said Rose Villa CEO Vassar Byrd. “You have a healthy model of neighborhoods where people participate in projects together for the benefit of the entire community. Socially that is incredibly helpful.”

Byrd said small home development could lead to future projects centered on environmental sustainability starting with construction. The Oaks neighborhood was built by Portland-based design firm Green Hammer and homes were built with airtight insulation, heat recovery ventilators, energy-efficient water pumps, LED lighting and Energy Star appliances, triple-panel windows and special shower heads, sinks and toilets.

During a swath of severe weather last year, the community lost power, Byrd said, at which point staff saw first-hand how the connected nature of the community was paying off.

“We had people bringing their camping equipment out and cooking for one another,” Byrd said. “Everyone had resources and shared them because you can see what’s going on. It makes people feel responsible for their own independence and their interdependence. We think that makes life more worth living.”

Through the neighborhood concept, Lutheran Homes CEO Frank Shepke said the pandemic put the spotlight on the importance of mixing interconnectivity with independence, noting that the small home concept allowed residents to feel more in control of their environment. That control comes from residents having multiple entryways and various home features that wouldn’t come on a standard floor of an independent living community.

“That’s a powerful factor that a lot of people are going to find attractive in the years ahead,” Shepke said. “I don’t want to say that it’s pandemic-proof, but it certainly lends itself to be that way.

When the going goes up 

While small home communities are thought of as standalone units within a larger community or consisting of a single home, some projects are going vertical. The rise of small-home style units within building concepts is proving to be a strong way to integrate care and independence. 

The Vista by CC Young, designed by HKS Architects, is a 10-story building with assisted living, memory care, skilled nursing and support services in the Dallas area. Within the building, certain floors have small home-style layouts. The project needed state approval after not fitting within Texas building codes and pushed the envelope of design and care integration.

“I think the shift from institutional to residential will absolutely continue,” said CC Young CEO Russell Crews. “Really, every aspect of resident care is enhanced with this layout. This will be a big trend going forward, in my opinion. It’s more of a resident-centric focus.”

With the rise of vertical, small home layouts, more senior living providers could shift to focus on urban growth, Warner said.

“Sites within urban environments are small and inherently need to go vertical,” Warner said. “I like seeing the trend that some developers are coming back to our cities and developing in urban environments to get seniors back in their communities and not on the periphery.”

The pandemic led to a mass exodus from urban centers, with social distancing limiting the appeal of city life and work-from-home policies enabling people to live further afield from offices. But now, that trend may be reversing, data show. Permanent moves to cities are up and temporary moves out of cities have normalized, according to findings from UBS.

After designing The Vista, Warner said HKS received multiple inquiries regarding construction, noting that the project garnered extreme interest, with more focus on shifting away from institutional models typically used in the past for large-scale development.

“This shift is taking an institutional environment and making it home again,” Warner said. “I think the pendulum swung too far on the institutional side (due to Covid) to life safety and sanitation. But clients are now willing to take a little bit more of a risk and put more maintenance time to make the environment feel more residential and home-like.”

The post As Senior Living Market Conditions Shift, Small Home Models Keep Gaining Momentum appeared first on Senior Housing News.

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