Patient growth has been a hallmark of Maplewood Senior Living, most recently on display in the six-year process of conceiving and launching the luxury Inspir brand with a Manhattan highrise project.
But CEO Gregory Smith believes that now is the time to hit the accelerator, particularly on new development.
“I’ve talked to our capital partner, and we’re go, go, go, go, go,” he said last week at the Senior Housing News BUILD event in Chicago.
With occupancy strained due to oversupply, new construction starts began to slow in the years leading up to the Covid-19 pandemic — then plummeted in 2020. Now, uncertainty over the ongoing pandemic, labor market woes, supply chain disruption, rising construction costs and a host of other challenges are putting some developers in a wait-and-see mode, Smith observed.
“But demographics aren’t changing — it’s coming, people are going to need housing,” he said.
With this in mind, Smith is pushing forward with expansion plans for both the Maplewood and Inspir brands. The East Coast, West Coast and U.K. are key markets for growth, and he is seeking to exceed the expectations of a discerning clientele through innovations in health care accessibility, customized lifestyle experiences and unique building designs.
Urban luxury and beyond
Smith marked a major milestone earlier this year, when the first Inspir community opened its doors in New York City.
Covid-19 did create construction setbacks for the Upper East Side highrise, but the delays provided an opportunity to upgrade building features, such as adding infection control elements to the HVAC systems, Smith said.
The sales and marketing teams also “recalibrated” during the pandemic, with a focus on staying closely connected with the depositor base and taking a more hands-on approach. They kept leakage of depositors to a minimum, and now lease-up is “picking up really well,” according to Smith.
Residents of Inspir are a “discerning” clientele, made up largely of long-time New Yorkers who are accustomed to the urban lifestyle — and Smith’s vision is to create a senior living option that preserves and enhances that lifestyle.
To that end, the physical plant differs from a typical residential building. In fact, Smith had to allay concerns from the project architect, about having 35% to 40% of the building dedicated to amenity space versus rentable units.
The goal in having so much common space is to engage residents and promote their vertical travel through the building.
Furthermore, the common spaces and overall design of the building, with materials such as marble and oak, create a sense of being in a homelike oasis within the urban jungle.
“Our residents can go outside on the terrace or the skypark on the 17th floor, with soaring ceilings and sliding doors … it brings nature into the building,” Smith said.
Maplewood first began hatching plans for Inspir in about 2012, and the long lead time on the NYC development also enabled the company to forge relationships with a host of health care providers, cultural institutions and other partners.
There are between 50 and 60 partnerships that are supporting the Inspir community in NYC, Smith estimated.
Partners such as Mount Sinai help create what Smith calls an “integrated health system within the buiding,” and each resident has an individual care manager.
Meanwhile, arts and culture partnerships are also crucial. A number of highly accomplished older artists — some in their 90s — are coming into the building to lead classes and otherwise interact with residents, which Smith sees inspiring residents to participate in their own creative pursuits.
“It’s not just saying, ‘We can get you to a museum or gallery,’ but we can bring it here,” Smith said, of leveraging partnerships to make Inspir itself a hub of activity and engagement opportunities.
Partnerships — and on-site health care — also figure prominently in another recently opened Maplewood development project. Located on the campus of Penn Medicine-Princeton Health, Maplewood at Princeton marks the company’s entry into the New Jersey market.
The location creates numerous opportunities for innovative and accessible care, Smith said. Doctors and clincians can easily visit the community, the health system helps fill in staffing gaps with per-diem workers, and residents have been attracted to the model. With occupancy already approaching 60%, Smith believes this is the fastest fill-up in Maplewood’s history.
“It’s a symbiotic tradeoff and clearly working well,” he said.
In fact, residents have been moving in across the Maplewood portfolio, with demand coming back strong following the pandemic dip.
Excluding the Inspir building in Manhattan, occupancy across the core Maplewood portfolio is now in the low-90s, according to Smith — and such stability in the platform should provide a needed foundation for the aggressive growth that he is targeting.
Getting aggressive on development
Just about two months ago, Maplewood announced plans for a second Inspir project, which involves the conversion of the former Fairfax Hotel in Washington, D.C.’s Embassy Row.
Early in the Covid-19 pandemic, senior living developers and operators predicted that hospitality industry distress would lead to hotel conversion opportunities. Such projects have emerged, but finding a suitable hotel for redevelopment is a challenging process, Smith emphasized.
The physical plant is the usual constraint, with issues such as low ceilings, unfriendly column spacing and small rooms. The D.C. hotel was the rare find with large floorplates and rooms that are around 500 square feet, enabling conversion to one- and two-bedroom units.
“We hit a gem,” Smith said.
Still, the project is probably 36 months out from opening, with major interior renovations needed, including new mechanical systems. The project team is seeking to preserve historical elements of the building, which has played host to U.S. presidents and other dignitaries over the decades.
Maintaining the character of the building is core to the Inspir vision, Smith emphasized. As has been the approach for each Maplewood building, every Inspir community needs to fit the particular culture of its location.
At the moment, Smith’s “mind is racing” about how to design and program the Embassy Row project to fit the D.C. market; he stressed that core elements such as health care accessibility will be a constant for Inspir and Maplewood generally, but that Inspir is a lifestyle brand that must support the particular lifestyles that different consumer bases desire.
While hotel conversions and other redevelopment opportunities are not easy to find, Smith is on the hunt for them, because they offer greater speed-to-market than ground-up construction — particularly for large and complex projects like Inspir buildings.
And speed is of the essence, to get a head start while other developers are constrained by current complications related to capital availability, supply chain slowdowns and high construction costs.
With a dedicated and patient partner in Omega Healthcare Investors (NYSE: OHI), capital is not a pressing concern for Maplewood. However, the supply chain issues are real. Smith recently was taken aback to learn that lead time for furniture, fixtures and equipment on a renovation project had reached 30 weeks.
“Knowing that things will take longer and be more expensive, we take that into consideration when we do our underwriting, and we know that we could hit a hiccup, but I don’t think that’s a reason not to be developing right now,” Smith said. “Being out there when there’s not a lot of supply, and hitting the ground running, is something we’re going to be focused on.”
As for the pipeline, he intends to add further Inspir communities in New York City — with at least one and possibly two projects being redevelopments. And in addition to the company’s stronghold on the East Coast, he sees Florida and the West Coast as attractive markets for Inspir and Maplewood.
Inspir also is poised to go international, with one deal “pretty much locked and loaded” in London, Smith said. Omega owns about 150 care homes in the United Kingdom, and Smith is “incredibly bullish” on that market.
Even as he seeks to develop communities more aggressively than in the recent past, Smith remains focused on luxury market, not wanting to become “distracted” by opportunities such as middle-market senior living and active adult, which many other investors and operators are pursuing.
And, he remains “incredibly selective” about opportunities.
“We’re not building for the sake of building,” he said.
Such discipline is particularly important given the severe workforce crunch across the economy; unsurprisingly, labor is Smith’s top concern heading into 2022. The problem demands both creativity — for instance, he is interested in universal worker models — and getting the basics of wages, benefits and culture right.
Enabling career advancement is particularly important for retention, and Maplewood’s growth should help on this front by creating new opportunities for leadership. Smith shared the story of a dishwasher who rose through the ranks and ran the Princeton project.
In light of the labor issues and all the challenges related to development, Smith sees one quality as especially important for Maplewood.
“It’s being nimble,” he said. “If you’re able to make decisions — rational, prudent decisions — on the fly, you can pivot quickly if you need to, and that’s helped us along the way.”
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