Since 1991, Stackpole & Associates has conducted feasibility studies for senior living projects, including independent living, assisted living, nursing homes and CCRCs throughout the United States, including Hawaii, and in Central America. Assisted living feasibility studies, for example, employ a wide range of methods. A market study will determine if the available supply of a particular type of housing or service is adequate for the demand from the available customers or consumers of that service. This supply and demand ratio becomes an important market characteristic to determine if a proposed project should go forward. In this type of market study, demographics and the available supply of certain types of housing units or services are carefully reviewed. If the assisted living supply, for example, appears inadequate to meet the demand from the age, income and asset qualified individuals in the marketplace area, the market study would move forward to a feasibility study.
In a market feasibility study, the proposed project is evaluated from the economic perspective of whether or not the anticipated rents (or other charges) can support the operating costs and provide suitable margins. This type of feasibility analysis is often done from several perspectives to carefully determine whether the income from the proposed project will support the operating costs as well as the capitalized costs of construction and lease-up.
In independent living, assisted living as well as CCRCs, the available information about market rents and charges, as well as how quickly units have historically been absorbed in the marketplace, are important factors in determining overall market feasibility. How quickly new units have been absorbed in a marketplace area is of particular interest, and a good feasibility study will include past and predicted absorption rates.
For assisted Living, independent Living and CCRCs, as well as nursing homes, conducting thorough market feasibility studies helps determine likelihood of success, as well as the best way to configure the proposed project in terms of number of units, services to be provided, how best to promote or advertise and sell services to prospective customers and consumers. These marketing and sales issue can be derived several ways including focus groups, telephone or in-person surveys, conjoint research (also called “trade-off design” and “:multi-dimensional scaling”) and interviews with opinion leaders and referral sources in the marketplace area.