2008-08 Feasibility Study
~
-\
arketFeasibility Study for
Senior Housing in
Albertville, Minnesota
[Draft for Discussion]
reparedfor:
Guardian Angels.of Elk River
Elk River, Minnesota
The City of Albertville
Albertville, Minnesota
August 2008
xfield
Research Inc.
615 First Avenue NE
Suite 400
Minneapolis, MN 55413
612.338.0012
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:\1'ield
Rl"seardJ Inc.
,.
September 2, 2008
Mr. Dan Dixon
President/CEO
Guardian Angels of Elk River
280 Evans Avenue
Elk River, MN 55330
Mr. Larry Kruse
City of Albertville
5959 Main Avenue NE
P.O. Box 9
Albertville, MN 55301
Dear Mr. Dixon and Mr. Kruse:
We are pleased to present our study titled "A Market Feasibility Study for Senior Housing in Al-
bertville, Minnesota."
This study examines the market potential for senior housing with services to be developed in Al-
bertville, Minnesota. Our analysis finds that the senior population of Albertville and the sur-
rounding communities is growing rapidly and combined with the fact that there are no existing
market rate senior buildings with services in Albertville, St. Michael, or Otsego, that there is
strong potential to support a new facility.
We examined four potential locations for a new senior facility in Albertville and found that the
strongest Site is the ll.5-acre parcel on the west side of County Road 19, south of the Cottages
of Albertville. This is a strong location and combined with the strong reputation of Guardian
Angels in the surrounding area, we find that a senior facility on this site would be successful.
We recommend an 88-unit senior facility on the subject Site with 70 units that could be rented as
congregate or assisted living ("catered living unit") and another 18 units of memory care hous-
ing. Detailed recommendations can be found in the Conclusions and Recommendations section
of this report.
612-338-0012 (fax) 612-904-7979
615 First Avenue NE, Suite 400, Minneapolis, MN 55413
www.maxfieldresearch.com
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TABLE OF CONTENTS
Page
PURPOSE AND SCOPE OF STUDY .............................................................................. 1
SITE ASSESSMENT...... ...... ..................................... ............. .... ............ ....... ..... ............... 2
Introduction.................. ...... ...... ......... .... ................. ............. ..... ... ............. .......... ....... ...... 2
Analysis of Potential Site .... ............................. ................... ...... .... ......... ..... ....... ...... ....... 2
Conclusion .............. ......... ... ....... .......... ............. ...... ......... ......... ............... ............ ........ ... 6
DEMOGRAPHIC ANALYSIS ... ..... .... ... .................. ....... ........... ......... ... ....... ....... ........ .... 7
Introduction .... ...................... ................. ............................... ... ... ........... .... ................ ...... 7
Market Area Definition. ............. ........ .... ............... ........... ........ ......... .... ...... .... .... .... ........ 7
Population and Household Growth Trends ..................................................................... 7
Older Adult Population and Household Growth Trends and Projections ....................... 10
Older Adult and Senior Household Incomes .................................................................. 11
Senior Household Tenure........ .............................. ........ .......................... .......... .......... .... 13
Home Resale Values....... .......... ....... ................. ........ .................... ........ ...... ....... ..... ........ 14
Summary of Growth Trends and Demographic Characteristics ..................................... 16
COMPETITIVE MARKET ANALYSIS ........................................................................ 17
Introduction.............. ............. ............................................................. ...... ........ ...... .... ..... 17
Types of Senior Housing in Today's Market.................................................................. 17
Senior Housing in the Albertville Market Area ......................... ..................... ........ ........ 19
Pending Senior Housing Developments ......... .............. ............. ........... ......... ..... ............ 25
Focus Group Summary. ...... ....... ....................... ............................... ............ ......... .......... 25
CONCLUSIONS AND RECOMMENDATIONS.......................... ............... .......... ........ 27
Introduction.................. ..... ......................................... .................. ................ ....... ............ 27
Congregate Housing Demand Estimate ..... ................ ........ ..... ... ..... ............ ..... ..... ..... ..... 27
Assisted Living Demand Estimates.. ......................................... ................. ........ ............ 28
Memory Care Housing Demand Estimates ..................................................................... 31
Conclusions ................................................ ..................................................................... 33
Recommended Development Concept................... ......... ................. ..... .... ..... ................. 34
Competitive Advantages of the Proposed Concepts ..................................................::~.. 39
Projected Absorption....... ....................... ........... ..... .... .............. ................ ....................... 39
Marketing Considerations ......... .......... ...... ............ ............. .......................... ... .... ....... ..... 40
LIST OF TABLES
Table Number and Title Page
1. Population and Household Growth Trends and Projections, Albertville Market Area,
2000 to 2020 .... ....... ....... ............................. ..... .................. ................. ............. ............. 9
2. Older Adult Population & Household Age Distribution, Albertville Market Area,
2000 - 2013 ...... ................................ ............ ................. ....... ............. ............... ............. 10
3. Older Adult Income Distribution, Albertville Market Area, 2008 & 2013 .................. 12
4. Older Adult Household Tenure, Albertville Market Area, 1999 & 2000..................... 14
5. Resale of Single Familyand Multifamily Housing, Albertville Market Area, 2004 to
2008.......................................................................................................................... ..... 15
6. Senior Housing Facilities, Albertville Market Area, August 2008............................... 21
7. Market Rate Congregate Housing Demand, Albertville Market Area, 2008 & 2013 . 28
8. Market-Rate Assisted Living Demand, Albertville Market Area, 2008 & 2013 .......... 30
9. Memory Care Demand, Albertville Market Area, 2008 & 2013 .................................. 31
10. Senior Housing Demand Summary, 2008 & 2013 ....................................................... 34
11. Recommended Development Concept.. ................... ...................... ........... ........ ............ 35
PURPOSE AND SCOPE OF STUDY
Maxfield Research Inc. was engaged by Guardian Angels of Elk River and the City of Albert-
ville to study the market feasibility to develop a variety of senior housing products in Albertville,
including congregate senior housing, assisted living, and memory care.
The scope of this study includes an evaluation of the development potential at four identified
Sites in Albertville; a review of demographic trends and characteristics in the primary draw area
("Market Area" for senior housing in Albertville; collection and analysis of competitive market
data in the draw area; and an estimation of demand for senior housing in Albertville, including
demand for congregate senior housing, assisted living, and memory care.
This report includes both primary and secondary data. Secondary data is credited to the source
when used. Data on existing competitive senior housing, as well as, proposed competitive de-
velopments was collected by Maxfield Research Inc. and is accurate to the best of our knowl-
edge.
MAXFIELD RE SEARCH INC.
SITE ASSESSMENT
Introduction
This section of the report assesses the characteristics of the identified Sites as they relate to the
appeal for a senior housing development in Albertville, Minnesota. Albertville is a fast growing
city of about 6,700 people, located approximately half way between Minneapolis and St. Cloud.
Albertville is attractive because of its amenities, schools, businesses, housing and proximity to
Minneapolis and St. Cloud that allows residents to commute north or south for work. Albertville
is also the location of the Albertville Premium Outlet Mall with more than 100 stores. The Out-
let Mall has a draw area that extends into multiple states giving the City visibility it may have not
otherwise achieved.
There are four potential subject Sites in the City and all are currently undeveloped land located
close to the intersection of County Road 18/50th Street North East and LaBeaux Avenue (County
Road 19). Key points about these potential locations as they pertain to the appeal for senior
housing are discussed on the following pages. A map of the four potential Site locations is
shown on Page 3.
Analysis of Potential Sites
Site 1
Site I is located at the northwest comer of County Road 19 and 53rd Street. This 11.5 acre site is
directly south of the Cottages of Albertville, an independent age-restricted (55+) townhome de-
velopment that includes 56 for-sale townhomes and 44 rental townhomes.
Site I has excellent access and visibility from County Road 19 and would be very appealing for a
senior housing development because of its close proximity to goods and services nearby. Photo-
graphs of Site 1 are shown below. As shown in the photo on the left, single-family homes abut
the Site on its western boundary.
View across Site 1 to the West
MAXFIELD RE SEARCH INC.
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SITE ASSESSMENT
Potential Site Locations
'Maxfield Research Inc.
Across County Road 19 from Site 1 at 57th Street is Albertville Crossing, a 100,000+ retail center
anchored by a Coborn's Grocery. Businesses surrounding the grocery provide goods and ser-
vices including, banking, chiropractic, gas station, salon/spa, dental office, restaurant and fast
food.
Directly south of Site 1 on the northwest comer of the intersection of County Roads 18 and 19 is
the A1bertville-St. Michael Clinic. Eleven medical doctors practice at the clinic which offers
family and internal medicine, OB/GYN, pediatrics as well as the specialty cares of chiropractic,
orthopedics, and sports medicine. The close proximity of the subject Site to the Albertville-St.
Michael Clinic would be very appealing to seniors of the proposed senior building. ,
Also, the close proximity to the Cottages of Albertville would create a continul]-J;nbf;ca're[r<qm
independent living (Cottages) to congregate, assisted living and memory care w~lhin\Vatkll1~ dig'-
MAXFIELD RE SEARCH INC.
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SITE ASSESSMENT
tance. This would make both the Cottages and a new senior housing building more desirable to
area semors.
Overall, Site 1 has excellent access and visibility, close proximity to health care and goods and
services, and also has adjacent land uses that are compatible with senior housing. Thus, we find
that Site 1 would be very appealing for the proposed senior housing development.
Site 2
Site 2 is located south of County Road a few blocks west of County Road 19. The 14-acre Site is
undeveloped land adjacent to an existing residential neighborhood. Prairie Run Cottage Homes
are being developed to the north of County Road 18 across from the Site, and available single-
family home sites are located directly south of the Site.
The location of Site 2 is residential in nature but the Site is still located in close proximity (1.5
miles) to Cobom's Marketplace and less than a half mile from the Albertville-St. Michael Clinic.
Photographs of Site 2 are shown below.
View of Site 2 to looking to the south west
View of Site 2 looking east
While access to Site 2 is good, as is proximity to health care and services, visibility is not as high
as at any of the other three potential sites. Therefore, we would rank Site 2 behind the other three
potential sites in its appeal for senior housing, even though it would be suitable for senior housing.
Site 3
Site 3 is located on the north east comer of County Road 19 and 53rd Street (currently, 53rd Street
does is not extended east from County Road 19). Located directly east of Site 1 and directly
south of Coburn's Marketplace, this Site is also convenient to the goods and services listed pre-
viously as well as the Albertville-St. Michael Clinic and other amenities in the City including
easy access to Interstate-94 and the Outlet Mall.
Bordered on the east and south east by a residential neighborhood and to the sou~.~t~~;rarl'~~icul-
tural field, this Site is also desirable, but would require residents of the Albertvi~...l~Cot....1:tlr.g~s.to.,.
", ,<'.c_.' . ,
MAXFIELD RE SEARCH INC.
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SITE ASSESSMENT
cross County Road 19 if they wanted to visit a friend or family member or obtain services of-
fered by a new senior housing building. For this reason, we do not rank Site 3 as high as Site 1
in its appeal for a new senior housing development. Otherwise, Site 3 is also suitable for senior
housing.
View of Site 3 looking East across Co. Rd. 19
Site 4
Neighborhood on East side of Site 3
Site 4 is located east of County Road 19, west of Main Avenue and north of 50th Street (County
Road 18). This Site is bordered by residential neighborhoods to the north and east, agricultural
land to the west and the Albertville St. Michael High School to the south. Overall, all of the sur-
rounding land uses are compatible with a senior housing development.
View of Site 4 looking north
South of Site 4 -Albertville St. Michael High School
Like the other potential sites, Site 4 is in close proximity to health care and goods and s~J"'V\fes,
including the Albertville-St. Michael Clinic (less than one-half mile away). Its acse\s~~~~d \iisi-
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SITE ASSESSMENT
bility are also good, although the Site may be slightly less desirable due to the traffic generated
by the High School on 50th Street.
While Site 4 is suitable for a senior housing development, we would rank it below Site 1 for the
same reason as Site 3 - and that is residents of the Cottages of Albertville could walk to a new
senior housing development located on Site 1, but not Sites 3 or 4.
Conclusion
All four Sites are desirable for senior housing in Albertville. The Sites are located in close prox-
imity to each other and the aforementioned amenities, with easy access to main thoroughfares
and Interstate-94.
It is our opinion that Site 1 is the most desirable because it is adjacent to the 100-unit Cottages of
Albertville, which would provide access to services for the residents living in the independent
cottages. Because residents could easily walk between the developments, there is the ability to
keep couples in close proximity to each other if one requires care and there would also be a natu-
ral feeder system from the independent cottages into the proposed congregate, assisted living and
memory care units.
Site 1 also has excellent access and visibility from County Road 19 and is only one block away
from the Albertville-St. Michael Clinic at the intersection of County Roads 18 and 19 . We rec-
ommend proceeding with Site 1 as the first choice for the proposed senior housing development.
MAXFIELD RE SEARCH INC.
DEMOGRAPHIC ANALYSIS
Introduction
This section of the report examines demographic factors related to the demand for senior housing
with support services. This section provides a review of overall growth trends and an analysis of
the demographic composition of the senior population and household base for an area defined as
the primary draw area for senior housing located in Albertville, Minnesota.
Market Area Definition
Maxfield Research Inc. determined the draw area for senior housing in Albertville, Minnesota
based on geographic and man-made barriers, traffic and community orientation patterns, and our
experience in senior housing feasibility. The draw area, herein referred to as "Market Area," in-
cludes Albertville and the surrounding Cities of St. Michael, Hanover, Rogers, Dayton, and Ot-
sego and the townships of Monticello and Hassan. We estimate this geographic area would pro-
vide 65% of the market support for senior housing on a site in Albertville.
The remaining portion of demand-we estimate 35o/o--for the subject development would be de-
rived from outside the defined Market Area. This portion of demand would be comprised of
people currently residing just outside the Market Area who have an orientation to the area (i.e.
church, doctor, etc.), people who once resided in the area and desire to return, and parents of
adult children living in the Market Area.
A map illustrating the geographic area included in the Albertville Market Area is shown on the
next page.
Population and Household Growth Trends
Table 1 on Page 9 shows population and household growth trends for the Albertville Market
Area from 2000 to 2020. The data for 2000 is from the u.s. Census Bureau, while the 2010 and
2020 projections are calculated by Maxfield Research Inc. based on data obtained from Claritas
Inc., and local building permit trends.
The following bullet points summarize growth trends and projections in the Market Area:
· From 2000 to 2010, the Albertville Market Area is projected to reach an estimated population
total of 62,841 and a household total of 21,477. This represents growth of 21 ,260 people
(60%) and 9,947 households (86%).
· From 2010 through 2020, the Market Area is projected to grow, but at a slower rate than the
previous decade with population increasing by 12,261 people (22%) and households increas-
ing by 9,489 (44%).
MAXFIELD RE SEARCH INC.
DEMOGRAPHIC ANALYSIS
Albertville l\larket ~L\rea
Maxfield Research Inc.
As of2000, the Albertville Market Area totaled 35,353 people and 11,530 households. The
population and household bases increased by 60.1 % and 86.3%, respectively, through 2008 and
are projected to continue to grow through 2013. By 2013, the Market Area is projected to have
an estimated 68,875 people and 24,190 households.
Because the impetus of this study is to determine the demand for age-restricted housing, from
this point forward, our demographic analysis focuses on the Market Area's older population and
household base.
MAXFIELD RE SEARCH INC.
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DEMOGRAPHIC ANALYSIS
Older Adult (Age 55+) Population and Household Trends
Table 2 shows the age distribution of people and households age 55 and older in the Albertville
Market Area. Data presented for 2000 is obtained from the U.S. Census. Estimates for 2008 and
projections through 2013 are based on data provided by Claritas, Inc., a nationally recognized
demographic services firm.
· The Market Area's older adult and senior population and household bases experienced robust
growth in all age segments between 2000 and 2008. Between 2000 and 2008, the Market
Area's older adult and senior population (55+) grew by 4,380 people (108.1%) and 2,660
households (112.3%).
TABLE 2
OLDER ADULT (55+) POPULATION & HOUSEHOLD AGE DISTRIBUTION
ALBERTVILLE MARKET AREA
2000-2013
Sources: U.S. Census Bureau; Claritas, Inc.; Maxfield Research Inc.
MAXFIELD RE SEARCH INC.
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DEMOGRAPHIC ANALYSIS
· The 55+ population and household bases are expected to continue to experience strong
growth through 2013, although this growth is projected to occur at a lesser rate. Between
2008 and 2013, the Market Area's older adult and senior population is projected to add ap-
proximately 4,095 people (48.6%).
· Growth in the older adult and senior population overall is predominately propelled by growth
in the younger senior cohorts. The 55 to 64 age cohort is projected to have the highest nu-
merical growth between 2008 and 2013 (2,225 people, or 45.2%), followed by the 65 to 69
age cohort (825 people, or 59.7%), and the 70 to 74 age cohort (523 people, or 59.4%).
Growth by percentage is projected to be highest for the 65 to 69 age cohort.
· Additionally, the older senior age cohorts (75+) are projected to experience considerable
growth through 2013, although the growth numerically and by percentage is less than .
younger age cohorts. Comparatively, less growth in this age range can be attributed to a pe-
riod of low birth rates during the Great Depression, which impacts the numerical composition
of aging cohorts today. Between 2008 and 2013, the 75+ age cohort is projected to add 522
people, or 41.9%.
· Household growth trends are an important factor in assessing demand for housing products
since households represent occupied housing units. Similar to population growth trends,
household growth in the older adult and senior age cohorts is projected to continue to be
strong. Between 2008 and 2013, the 55+ age cohorts are projected to add a total of2,494
households (49.6%).
· Growth in younger and older senior households will drive demand for additional service-
enhanced senior housing products. The target market for housing with services is typically
households age 75 and older; through 2013, this segment is projected to grow with an addi-
tion of about 335 households (44.0%). These households will be the primary market for the
subject development.
Older Adult and Senior Household Incomes
Table 3 shows income levels for older adult and senior households in the Market Area in 2008
and 2013 based on information provided by Claritas, Inc. It is important to note that the data
does not account for the asset base of senior households or supplemental income that a senior
household could gain from the proceeds of a sale of a home or from contributions from family
members.
The frailer the senior, the greater the proportion of their income they will typically spend on sen-
ior housing alternatives. Studies have shown that seniors are willing to pay increasing propor-
tions of their incomes on housing with services, beginning with an income allocation of 40% to
50% for market rate active adult housing with little or no services, increasing to 65% for inde-
pendent/few-services care and to 80% to 90% for assisted living housing.
MAXFIELD RE SEARCH INC.
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DEMOGRAPHIC ANALYSIS
TABLE 3
OLDER ADULT (55+) INCOME DISTRIBUTION
ALBERTVILLE MARKET AREA
2008 & 2013
MAXFIELD RE SEARCH INC.
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DEMOGRAPHIC ANALYSIS
The proceeds from the sale of their home, as well as financial assistance from their adult chil-
dren, are often used as supplemental income in order to afford senior housing alternatives. The
data provided in Table 2 is incorporated into our demand calculations, which are presented in a
following section.
The following are principle conclusions from Table 3.
· As of2008, the median household income is an estimated $76,950 for households age 55 to
64, $38,620 for households age 65 to 74, and $29,310 for households 75 and older. The
higher incomes for older adult (55 to 64) and younger senior (age 65 to 74) households com-
pared to older senior households (age 75+) are primarily due to the fact that a higher propor-
tion of younger seniors are married and are more likely to have two pensions, along with the
fact that many younger seniors continue to have income-producing employment.
· The income-qualified market for senior housing is defined as households earning annual in-
comes above $35,000 ($40,000 in 2013 after adjusting for inflation). As of 2008, there are
approximately 1,234 senior households (age 65+) in the Market Area with incomes of at least
$35,000, accounting for 56.9% of all 65+ households.
· Demand for market rate senior housing products will be supported by an increase in the
number of older adult and senior households that income-qualifY for housing products.
Through 2013, we estimate the number of age- and income-qualified households will reach
1,913 households, an increase of 55% from 2008.
· Since service-enhanced housing is need driven, seniors with low incomes are still candidates
for private pay assisted living and memory care, provided they have home equity or other
savings that they can utilize to pay for the costs. Very low-income seniors who are Medi-
care-qualified also could live in assisted living facilities that accept Elderly Waivers.
Senior Household Tenure
In addition to their existing income sources, many senior households would be able to derive
supplemental income to use toward housing alternatives by investing the proceeds from the sales
of their homes. Table 4 on the following page shows the homeownership rates among senior co-
horts in 1990 and 2000, according to the U.S. Census Bureau.
The following are key points from Table 4.
· In 2000, homeownership rates were 95% for households age 55 to 64, decreasing to 87% for
households age 65 to 74 and to 81 % for households age 75 and older. Decreasing home
ownership rates are often correlated with increased household age since older seniors are
more likely to select renter-occupied housing as their service needs increase. In this Market
Area, a sharp decrease in homeownership for households age 75 and older indicates if sen-
iorsbegin moving to renter-occupied housing in their mid-70's.
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MAXFIELD RE SEARCH INC.
DEMOGRAPHIC ANALYSIS
TABLE 4
OLDER ADULT HOUSEHOLD TENURE
ALBERTVILLE MARKET AREA
1999 & 2000
Sources: u.s. Census Bureau, Maxfield Research Inc.
01 Homeownership rates between 1990 and 2000 increased slightly for older adult (55 to 64)
and older senior (75+) households. Increasing homeownership rates among these households
may be due to several factors, including an inadequate supply of renter-occupied senior hous-
ing options, the introduction of owner-occupied senior housing options, or an increased pro-
pensity toward homeownership in the years of later life.
· The resale of single-family homes would allow additional senior households to qualify for
market rate housing products, since equity from the home sale could be used as supplemental
income for alternative housing. These considerations are included in our demand calcula-
tions, which are presented in a following section of this memorandum.
Home Resale Values
Table 5 presents home resale data for single-family and multifamily homes in the Albertville
Market Area from 2004 to 2007 as well as January thru July 2008. This data offers insight on
relative ease of selling single-family homes and amount of equity seniors may be able to derive
from the sale of their homes, should area seniors choose to relocate to senior housing alterna-
tives.
The following points are a summary of key findings.
· The average single-family home resale price in the Albertville Market Area peaked in
at $285,419. Last year, the Market Area experienced a decline in average resale i
8.4%. The number of home sales has declined in the Market Area starting in
family home resale prices peaked in 2005 at $171,729. The average resale
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MAXFIELD RE SEARCH INC.
DEMOGRAPHIC ANALYSIS
from 2005 through 2007 when it reached $163,772, a decline of -4.6% over the two-year pe-
riod.
TABLE 5
SINGLE-FAMILY AND MULTIFAMILY HOME RESALES
ALBERTVILLE MARKET AREA
2004 thru Jul 2008
No. of Average Pet. Median Pet. Avg.
Year Sales Price Change Price Change DOM
2004 555 $262,117 $239,900 45
2005 585 $271,426 3.6% $255,500 6.5% 64
2006 456 $285,419 5.2% $264,550 3.5% 71
2007 402 $261,389 -8.4% $244,500 -7.6% 75
Thru 7-31-2008 297 $240,788 -7.9% $220,000 -10.0% 86
----
No. of Average Pet. Median Pet. Avg.
Year Sales Price Change Price Change DOM
2004 180 $163,506 $160,275 46
2005 162 $171,729 5.0% $169,900 6.0% 78
2006 148 $169,791 -1.1% $166,450 -2.0% 75
2007 104 $163,772 -3.5% $154,950 -6.9% 84
Thru 7-31-2008 59 $145,993 -10.9% $142,000 -8.4% 96
Sources: Northstar Multiple Listing Service; Maxfield Research Inc.
. Median resale prices are often a better indicator of home resale prices, since median figures
are not skewed by uncommonly low or high priced homes. Median single-family resale fig-
ures in the Albertville Market Area appreciated annually until 2007, at which point the me-
dian resale price decreased by -8%. Median multifamily resale prices peaked in 2005 at
$169,900. The resale price for multifamily homes decreased in both 2006 and 2007 when it
was $154,950, a decrease of -8.8% over the two-year period.
. The average number of days on market has lengthened substantially since 2004, although the
2006 and 2007 figures are partially skewed by a recent MLS reporting change. This figure
increased from 45 days in 2004 to 75 days in 2007 to 86 days so far in 2008 indicating that it
takes approximately twice as long to sell a home in today's market. Both single family and
multifamily home resale prices have continued to decline through July 2008.
. The slowdown in the real estate market will have some impact on the ability of senio
their homes within a relatively short period of time. Thus, until the housing mar
proves, absorption for new senior housing, particularly adult housing that i
15
MAXFIELD RE SEARCH INC.
DEMOGRAPHIC ANALYSIS
may be slower than demand would indicate.
. Based on the 2007 median resale price in the Albertville Market Area ($244,500), a senior
household could generate approximately $10,200 of additional income annually (about $850
per month), if they invested in an income-producing account (4.5% interest rate) after ac-
counting for marketing costs and/or real estate commissions (7% of home sale price). Should
a senior utilize the home proceeds on a dollar-for-dollar basis to support living in senior
housing with services, the proceeds of this home would last roughly 113 months (over nine
years) based on an average monthly rent of $2,000.
Summary of Growth Trends and Demographic Characteristics
. The overall population and household growth in the Market Area is expected to continue to
increase during this decade and the next. The older adult and senior population is projected
to experience substantial growth through the current decade with the addition of over 4,095
people (55+) and 2,490 households from 2008 to 2013.
. The 55 to 64 age cohort is projected to experience the highest percentage of growth within
the older adult and senior population from 2000 to 2008 with a 119% increase in population.
From 2008 to 2013, the cohorts projected to see the highest increase in population is the 65 to
69 and 70 to 74 age cohorts.
· Based on median income figures, an increasing proportion of Market Area seniors will be po-
tential candidates for market rate senior housing as the income base of older adult and senior
households increases over the next five years. After accounting for inflation, there will be
nearly 5,418 older adult and senior (55+) households who would be age- and income-
qualified for market rate senior housing by 2013.
· Although resale activity has slowed in the Market Area, seniors looking to sell their single-
family homes should be able to do so within a reasonable amount oftime and would be able
to use the equity derived from the sale of their homes toward senior housing alternatives.
The overall demographic characteristics impacting demand for senior housing demonstrate a
positive existing and future environment for the development of additional senior housing prod-
uct. Substantive increases in the older adult and senior population, coupled with a growing
population and household numbers and the increased affluence of area seniors support demand
for market rate senior housing alternatives into the foreseeable future.
MAXFIELD RE SEARCH INC.
COMPETITIVE MARKET ANALYSIS
Introduction
The preceding demographic analysis examined factors relating to the demand for senior housing
with services in the Albertville Market Area. This section will provide an overview of contem-
porary senior housing and then assess the current supply and market conditions for comparable
senior housing in the Albertville Market Area. Finally, this section will address any pending
senior housing developments that may impact demand for additional product.
Types of Senior Housing in Today's Market
For analytical proposes, Maxfield Research Inc. classifies market rate senior housing into four
categories based on the level and type of services offered:
~ Active Adult projects (or independent living without services available) are similar to a gen-
eral-occupancy apartment building, in that they offer virtually no services but have age-
restrictions (typically 55 or 62 or older). Organized activities and occasionally a transporta-
tion program are usually all that are available at these projects. Because of the lack of ser-
vices, Adult/Few Services projects typically do not command the rent premiums of more ser-
vice-intensive senior housing.
~ Congregate projects (or independent living with services available) offer support services
such as meals and/or housekeeping, either on an optional basis or a limited amount included
in the rents. These projects typically dedicate a larger share of the overall building area to
common areas, in part, because the units are smaller than in adult housing and in part to en-
courage socialization among residents. Congregate projects attract a slightly older target
market than adult housing, typically seniors age 75 or older. Rents are also above those of
the Adult/Few Services buildings, even excluding the services. Sponsorship by a nursing
home, hospital or other health care organization is common.
~ Assisted Living facilities come in a variety of forms, but the target market for most is gener-
ally the same: very frail seniors, typically age 80 or older (but can be much younger, depend-
ing on their particular health situation), who are in need of extensive support services and
personal care assistance. Absent an assisted living option, these seniors would otherwise
need to move to a nursing facility. At a minimum, assisted living projects include two meals
per day and weekly housekeeping in the monthly fee, with the availability of a third meal and
personal care (either included in the monthly fee or for an additional cost). Assisted living
facilities also have either staff on duty 24 hours per day or at least 24-hour emergency re-
sponse.
~ Some projects offer self-contained dwelling units similar to a less service-intensive senior
apartment building with full kitchens and spacious rooms. Projects offering kitchens in the
units may include only two meals per day while those without kitchens in the units generally
provide three meals per day. Other projects do not have kitchens and are merely u
versions of board- and-care facilities with sleeping units and communal living
Monthly fees vary depending on the number and type of services included,t'
17
MAXFIELD RE SEARCH INC.
COMPETITIVE MARKET ANALYSIS
units, but most facilities have fees starting at roughly $2,600 per month. Because of the high
cost of care, many facilities accept financial assistance through State programs like Elderly
Waivers.
~ Memory Care facilities, designed specifically for persons suffering from Alzheimer's disease
or other dementi as, is one of the newest trends in senior housing. Projects will consist mostly
of suite-style or studio units or occasionally one-bedroom apartment-style units, and large
amounts of communal areas for activities and programming. In addition, staff typically un-
dergoes specialized training in the care of this population. Because of the greater amount of
individualized personal care required by residents, staffing ratios are much higher than tradi-
tional assisted living and thus, the costs of care are also higher. Typical monthly fees for
memory care units start at about $4,000 per month. Unlike conventional assisted living,
however, which deals almost exclusively with widows or widowers, a higher proportion of
persons afflicted with Alzheimer's disease are in two-person households. That means the de-
cision to move a spouse into a memory care facility involves the caregiver's concern of in-
curring the costs of health care at a special facility while continuing to maintain their home.
~ Skilled Nursing Care, or long-term care facilities provide a living arrangement that integrates
shelter and food with medical, nursing, psychosocial and rehabilitation services for persons
who require 24-hour nursing supervision. Residents in skilled nursing homes can be funded
under Medicare, Medicaid, Veterans, HMOs, insurance as well as use of private funds.
Typical daily rates for skilled nursing care beds generally start at about $100 per day. These
facilities are licensed by the State of Minnesota.
The senior housing products available today, when combined with long-term care facilities form
a full continuum of care, extending from virtually a purely residential model to a medically in-
tensive one. Often the services available at these projects overlap with another making these
definitions somewhat ambiguous. In general, "Adult" projects tend to attract younger active sen-
iors, who merely wish to rid themselves of home maintenance; Congregate projects serve inde-
pendent seniors that desire support services (i.e., meals, housekeeping, transportation, etc.) while
Assisted Living projects tend to attract older, frail seniors who need assistance with daily activi-
ties, but not the skilled medical care available only in a Nursing Facility.
CONTINUUM OF HOUSING AND SERVICES FOR SENIORS
Single-Family
Home
Fully Independent
Lifestyle
Fully or Highly
Dependent on Care
MAXFIELD RE SEARCH INC.
Source: Maxfield Research Inc.
COMPETITIVE MARKET ANALYSIS
Senior Housing in the Albertville Market Area
In order to assess the potential demand for senior housing in Albertville, Maxfield Research in-
ventoried congregate, assisted living, and memory care facilities in and around the Albertville
Market Area.
Diamond Crest Assisted Living and Well stead Memory Care are located on the same campus in
Rogers and are the only two senior housing facilities located in the Albertville Market Area. All
other facilities are located outside the Market Area and are presented as examples because of the
lack of comparable product within the Market Area (we surveyed five other facilities located out-
side the Market Area).
The following are key points from the information presented in Table 6.
Con!?:re2:ate
There are no congregate housing facilities located in the Market Area. The four profiled facilities
are located nearby in Maple Grove, Monticello, and Elk River and are likely among the first
choices for Market Area residents currently seeking this type of housing. These facilities pro-
vided as examples of unit sizing, pricing and services around the Market Area.
Outside the Market Area
· Rose Arbor of Chapel wood is the newest project profiled. Built in 2001, it is located on the
Chapelwood campus. The 95 total units consist of 55 one-bedroom units ranging from 563
to 687 square feet with monthly fees of $1 ,51 0 to $1,645 per month. The two-bedroom, one
bathroom units range from 863 to 966 square feet with a monthly fee of $1 ,850 and the two-
bedroom/two-bathroom units are 1,022 square feet with a monthly fee of $2,080 per month.
Residents in these units may age in place and purchase additional services up to the assisted
living level. One meal per day is provided at this rent level. Rose Arbor is 94% occupied.
· St Benedict's Village is located on the St. Benedict's campus with assisted living and mem-
ory care facilities. The Village has 59 congregate units including one-bedrooms at 701 square
feet with a monthly rent of $1,284. One-bedroom plus den units at 925 square feet with a
monthly rent of$I,397, and two-bedroom units at 1,289 square feet with a monthly rent of
$1,752 All units have full kitchens, with the option to purchase a noon meal. Residents also
have 24-hour care and access to common area amenities shared by the campus.
· Mississippi Shores, located in Monticello was built in 1996. It has 49 congregate units rang-
ing from 603 to 712 square feet and $790 to $835 monthly rent for one-bedroom units. Two-
bedroom units range from 910 to 974 square feet and $1,170 to $1,263 monthly rent. Op-
tional meals are available for purchase.
MAXFIELD RE SEARCH INC.
COMPETITIVE MARKET ANALYSIS
Assisted Livinl!
i
Diamond Crest is the only assisted living facility located ~n the Market Area. Three other facili-
ties located around the Market Area are profiled to provi~e examples of unit sizes, pricing and
services. I
I
i
I
· Diamond Crest, located in Rogers was built in 2002 ahd is located on the Wellstead of
Rogers Campus. The 66 units consist of 54 one-bedrdom units and 12 two-bedroom units.
Square footages range from 743 to 762 in the one-bed 100m units with a monthly fee of ap-
proximately $3,050. Two-bedroom units range from ,121 to 1,192 square feet with rents
starting at $3,352 to $3,600 per month. Services incl de three meals daily, weekly house-
keeping, laundry and linens and 24-hour care. Diamo~d Crest has a 62% occupancy rate. As
we understand, Diamond Crest's low occupancy rate ils partly due to higher base monthly
fees and the fact that it does not accept Elderly Waivets.
i
i
Inside the Albertville Market Area
Outside the Market Area
.
Guardian Angels by the Lake is a 60-unit facility bUilt~. n 1999. It consists of mostly one-
bedroom units ranging from 440 to 520 square feet wi h monthly fees ranging from $2,279
$2,617. The four two-bedroom units are 650 square :fI et with a monthly fee of $2,830. All
units require a second person fee of $283 per month. reakfast and lunch, laundry, linens,
and housekeeping are included in the monthly fee. Guardian Angels is 94% occupied.
.
Rose Arbor of Chapelwood has 95 units and consists of 55 one-bedroom units ranging from
563 to 687 square feet with assisted living monthly fees of $3,090 to $3,200 per month. The
two-bedroom one bathroom units range from 863 to 966 square feet with a monthly assisted
living fee of$3,625 to $3,730 and the two-bedroomltwo-bathroom units are 1,022 square feet
with a monthly assisted living fee of $3,830 per month. These units are flexible and may be
either congregate or assisted living. One meal per day is provided at this rent level along with
weekly housekeeping, laundry and linens. The overall occupancy is 94%.
.
St. Benedict's Court is located in Monticello. Built in 2000 and expanded in 2008, it has 46
units, studios at 462 square feet and $1,896 per month, one-bedroom units at 649 square feet
and $2,519 per month, and two-bedroom units at 848 square feet with a monthly fee of
$3,075. All units have full kitchens. Three meals daily, housekeeping and linens are pro-
vided in monthly fee.
MAXFIELD RE SEARCH INC.
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COMPETITIVE MARKET ANALYSIS
Albertville Area Senior Buildings
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MAXFIELD RESEARCH INC.
23
COMPETITIVE MARKET ANALYSIS
Memorv Care Housilll!
Of the four memory care projects profiled, Wellstead is the only facility in the Albertville Market
Area. The others are located around the Market Area and are presented due to the lack of exist-
ing examples of memory care housing in the Market Area.
In the Albertville Market Area
. Wellstead of Rogers, built in two phases, 1999 and 2001, has a total of 164 memory care
units, including 149 private studio units and 15 double-occupancy units. Unit sizes range be-
tween 266 and 401 square feet and have monthly rents ranging from $4,500 to $6,000 for a
companion unit and $4,800 to $6,300 for a private studio unit. Monthly rents include all
utilities, three meals per day, transportation, daily housekeeping, weekly laundry, activity
programming, medical reminders, personal care assistance, and 24-hour supervision. Well-
stead has a 92% occupancy rate.
Outside the Market Area
. St. Benedict's memory care is located on a campus with congregate and assisted living hous-
ing in Monticello. The campus added 16 memory care units in 2008 for a total of 30 units at
452 square feet with a monthly fee starting at $3,933 and increasing depending on individual
levels of care required. Monthly fees include all utilities, three meals per day, transportation,
daily housekeeping, weekly laundry, activity programming, medical reminders, personal care
assistance, and 24-hour supervision.
. Wildflower Lodge at Chapelwood located in Maple Grove has a total of 42 units. Built in
2002, all units are studios ranging from 174 to 466 square feet and have monthly fees starting
at $4,050 (Additional fees apply for higher levels of care). Monthly fees include all utilities,
three meals per day, transportation, daily housekeeping, weekly laundry, activity program-
ming, medical reminders, personal care assistance, and 24-hour supervision. Wildflower
Lodge is located on a campus with Rose Arbor congregate and assisted living facilities. The
facility has an occupancy rate of95.3%.
. Guardian Angels by the Lake built in 1999 has 13 units of memory care. The twelve one-
bedroom units range from 440 to 520 square feet with starting monthly fees ranging from
$3,007 to $3,339. The one two-bedroom unit is 650 square feet with a monthly fee starting at
$3,548. Monthly fees include all 24-hour supervision, emergency response system and wan-
derguard, three meals per day, transportation, housekeeping, laundry, activity programming,
medical reminders, personal care assistance, and 24-hour supervision. Additional fees apply
for higher levels of care. The occupancy rate is 94%.
MAXFIELD RESEARCH INC.
COMPETITIVE MARKET ANALYSIS
Pending Senior Housing Developments
Maxfield Research interviewed staff members in the Market Area cities in order to identify and
profile any pending senior housing projects that may be competitive with the proposed project.
The only identified pending project is a planned senior housing development in St. Michael.
Trident Development is proposing to build a 72-unit senior housing facility in St. Michael. The
three-acre site is located in the Town Center East master planned development and would in-
clude eight independent units, 50 assisted living units and 14 memory care units. The building
would be co-owned and managed by Tealwood Care Centers.
After review of the concept plan on July 2nd, 2008 the planning commission agreed to allow Tri-
dent to move forward to obtain formal approvals. The required Planned Unit Development
(PUD) Site Plan for Senior Housing was approved by the 8t. Michael City Council on August
12th, 2008. While we understand that Trident wishes to begin construction by the end of2008, it
remains doubtful since all of the City approvals have not been obtained and financing for the de-
velopment has not been secured. Thus, the exact timing of this development, if it moves forward
at all, is uncertain. If it does move forward, it would be competitive with the proposed senior
development by Guardian Angels in Albertville, particularly if it opened at the same time and
therefore shared the same initial lease-up period. We do not subtract this development from our
demand calculations later in this report (Tables 7 through 9), however, because of its preliminary
nature.
Focus Group Summary
Maxfield Research conducted two focus groups with the participation of 31 area seniors to gauge
the demand for and interest in additional independent and assisted living in Albertville. The fol-
lowing are main points from the focus group sessions:
· Albertville area seniors who require more care are moving to facilities in other communities
because Albertville has no existing options.
· Current residents of the Cottages of Albertville stated that they would choose to stay in Al-
bertville if they required housing with services rather than go to another City.
· A number of participants moved to or around Albertville to be near their adult children and
grandchildren. More seniors would probably do the same if they had an option like Guardian
Angels.
· Guardian Angels has a good reputation with the participants and the community, many know
people living in the Elk River facilities or people that receive home health care services
through Guardian Angels.
· The planned new hospital in Maple Grove will make senior housing in Albertville more at-
tractive.
MAXFIELD RESEARCH INC.
CONCLUSIONS AND RECOMMENDATIONS
Introduction
The impetus for this study is to assess the market potential for a variety of senior housing prod-
ucts, including congregate, assisted living, and memory care housing in Albertville, Minnesota.
Earlier sections of this report examined the potential Sites, growth trends and demographic char-
acteristics of Market Area seniors, current senior housing market conditions as well as an inven-
tory of pending senior projects. This section of the report forecasts demand for congregate, as-
sisted living, and memory care housing and presents recommendations for development, based
on factors presented in earlier sections.
Congregate Housing Demand Estimate
Table 7 presents our demand calculations for congregate senior housing in the Albertville Market
Area in 2008 and 2013.
The potential age and income-qualified base for congregate senior housing includes all senior
(65+) households with incomes of $30,000 as well as homeowner households with incomes be-
tween $20,000 and $30,000 who would qualify with the proceeds from the sale of their homes.
The proportion of eligible homeowners is based on the homeownership rates of areas seniors, as
identified in Table 4. The number of age, income, and asset-qualified households in the Albert-
ville Market Area is an estimated 1,569 households as of 2008.
Adjusting to include appropriate capture rates for each age cohort (2.5% of households age 65 to
74 and 10.5% of households age 75 and older) results in a local demand potential for an esti-
mated 75 congregate units in 2008. We estimate that seniors currently residing outside the Mar-
ket Area will generate 35% of the demand for congregate senior housing - increasing total de-
mand by 41 congregate units. This demand consists primarily of parents of adult children living
in the Market Area, individuals who live just outside the Market Area and have an orientation to
the area, and former residents who desire to return upon retirement. Together, demand from
Market Area seniors and demand from seniors who are willing to locate to the Market Area totals
an estimated 116 units of congregate senior housing as of2008.
From this total, we subtract existing competitive congregate units (0) minus a vacancy factor of
5% to allow for sufficient consumer choice and turnover. After subtracting the number of exist-
ing competitive units at 95% occupancy, demand potential remains at 116 units of congregate
housing in 2008.
No single site can capture all of the demand in a Market Area. We estimate that an appropriate
site can capture 40% of the excess demand potential in the Albertville Market Area. Applying
this potential capture rate results in excess demand that would be capturable on an appropri-
ate site for an estimated 46 congregate units in 2008.
MAXFIELD RESEARCH INC.
CONCLUSIONS AND RECOMMENDATIONS
TABLE 7
MARKET RATE CONGREGATE RENTAL SENIOR HOUSING DEMAND
ALBERTVILLE MARKET AREA
2008 & 2013
# of Households wi Incomes of>$30,000]
(plus)
# of Households wi Incomes of $20,000 - $30,000
(times) Homeownership Rate
(equals) Potential Market
864
371
+
257
x 87%
224
138
81%
111
(equals) Total Potential Market Base
(times) Potential Capture Rate
(equals) Potential Demand
= 1,087 482
x 2.5% 10.0%
27 + 48
~
75
+ 41
116
Total Local Demand Potential
(plus) Demand from Outside Market Area (35%)
(equals) Total Demand Potential
(minus) Existing Competitive Units 2
(equals) Total Congregate Demand Potential
(times) Percent of demand capturable at a Site in Albertville
o
116
1,409
504
+
321
x 87%
279
175
81%
141
= 1,688 645
x 2.5% 10.0%
--
42 + 65
~
107
+ 57
164
o
164
Adjusting for inflation, we estimate that households with incomes of $35,000 or more and senior
homeowners with incomes between $25,000 and $35,000 would qualify for congregate housing
in 2013. We did not identify any pending congregate developments to subtract from demand and
there are no existing competitive units in the Market Area. Following the same methodology, we
project that demand for congregate housing on an appropriate site in the Albertville Market
Area will increase to about 66 units through 2013.
Assisted Living Housing Demand Estimates
Table 8 presents our calculations for the age/income-qualified market for assisted living housing
in the Market Area for 2008 and 2013. The steps to estimate demand for assisted living units are
described below.
The primary market for assisted living housing in the Market Area is seniors ages 75 and over
with incomes of $35,000 or more. An income of $35,000 and a 90% allocation of that inco
on housing translate to an affordable monthly fee of about $2,600, approximately the s
MAXFIELD RESEARCH INC.
CONCLUSIONS AND RECOMMENDATIONS
price for basic assisted living. Most senior homeowners with lower incomes could also afford
assisted living housing upon allocating the proceeds from the sale of their homes toward assisted
living housing. It should also be noted that there are a significant number of seniors who will
spend down their assets in order to avoid institutional care.
Because the vast majority (90% according to an ALF A survey) of assisted living residents are
single, our demand methodology separates the number of senior households that live alone from
those that live with a spouse or other relative. We have further broken down the number of
senior households by household type and income. From these figures, we apply acceptable
capture rates to each income cohort and household type to derive the potential income-qualified
market. In 2008, we estimate there are roughly 423 age/income-qualified seniors in the
Albertville Market Area.
Because demand for assisted living housing is need-driven, we then reduce the age/income-
qualified market to account for the potential market needing assistance. Studies by several
government agencies indicate that about 30% of all non-institutionalized seniors ages 75 and
over need assistance with at least three activities of daily living and would be a potential market
for assisted living housing. Applying this proportion to the age/income-qualified household base
yields a potential assisted living market base of 127 senior households.
Due to the availability of home health care service providers and the likelihood of family
members providing limited assistance, we estimate that 55% of the age/income-qualified market
needing assistance will be able to remain in their homes or in other less service-intensive senior
housing. The remaining 45% will need assisted living housing. Applying this market
penetration rate of 45% results in local demand for about 57 assisted living units in 2008.
We estimate that at least 35% of demand for assisted living in the Market Area would come from
seniors currently living outside the Market Area. A substantial percentage of frail seniors will
move to be near their adult children. Because the Albertville Market Area has a much higher
proportion of people ages 45 to 54 compared to seniors ages 75 and over, seniors from outside
the Market Area will comprise a portion of the overall demand. Adding non-local demand to the
demand from Market Area residents results in a potential assisted living market base of about 88
households.
From this total, existing assisted living housing in the Market Area must be subtracted. In total,
there are 66 assisted living units in the Market Area. After subtracting the 37 competitive units
excess demand is calculated for 51 assisted living units in the Market Area in 2008.
No one location or development can capture all of the Market Area demand. We estimate that a
desirable site in Albertville could capture 40% of the Market Area demand. Thus, we estimate
that a site in Albertville could support 20 assisted living units in 2008, increasing to about
36 units in 2013.
MAXFIELD RESEARCH INC.
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CONCLUSIONS AND RECOMMENDATIONS
Memory Care Housing Demand Estimates
Table 9 shows the age/income-qualified market for memory care housing in the Albertville Mar-
ket Area for 2008 and 2013.
Demand is calculated by estimating the Market Area senior population (age 65+) in 2008 and
2013 and multiplying by the 10% incidence rate of Alzheimer's/dementia. This yields a poten-
tial market of 351 seniors in the Market Area in 2008.
According to data from the National Institute of Aging, about one out of four people with mem-
ory impairments constitutes the market for memory care housing. This figure takes into account
that the majority of seniors with dementia will still be able to live independently with the assis-
tance of a caregiver while those in the latter stages of dementia will require intensive medical
care that would only be available in skilled care facilities. Applying this figure to the estimated
population with memory impairments yields a potential market of about 88 seniors in the Market
Area in 2008.
TABLE 9
MEMORY CARE DEMAND
ALBERTVILLE MARKET AREA
2008 & 2013
2008 2013
65 + Population 3,509 5,379
(times) 10% Dementia incidence rate x 10% x 10%
(equals) Estimated senior pop. with dementia 351 538
(times) Percent needing specialized memory care assistance x 25% 25%
(equals) Total need for dementia care 88 134
(times) Percent income/asset-qualified x 45% x 45%
(equals) Total income-qualified market base 39 61
(plus) Demand from outside Market Area (35%) + 21 + 33
Total Demand for memory care units 61 93
(minus) Existing memory care units 1 38 * 38
(equals) Excess memory care demand in Market Area 23 55
Because of the staff-intensive nature of dementia care, monthly fees for this type
typically start at about $4,000. Residents of designated memory care housing
90% or more of their incomes for monthly fees. Thus, the income-qualified ma
MAXFIELD RESEARCH INC.
31
CONCLUSIONS AND RECOMMENDATIONS
individuals with incomes of $50,000 or more, or incomes of $40,000 and non-income producing
assets of $200,000 or more that could be converted to monthly income (i.e. senior homeowners
earning $40,000 or more). As with all senior housing with services, a portion of this demand
will also come from seniors who are willing to spend down assets and/or receive financial assis-
tance from family members. Multiplying the potential market by 45% results in a total of about
39 income-qualified seniors in the Market Area in 2008.
In addition, we estimate that 35% of demand for memory care housing would come from seniors
residing outside the Market Area. This additional demand brings total demand in the Market
Area up to 61 units in 2008.
Currently, there are a total of38 competitive memory care units in the Market Area to subtract
from the total potential demand. This is one quarter of the units at the Well stead of Rogers that
we have deemed competitive. Well stead has 164 total units but it draws from a very large geo-
graphical area due to its highly specialized levels of care that are not comparable to the subject
project. Subtracting these 38 units, minus a vacancy factor of 7%, results in demand for 23
memory care units in 2008. After accounting for growth in the age/income/asset-qualified mar-
ket excess demand rises to 55 units in 2013.
No one location or development can capture all of the Market Area demand. We estimate that a
senior facility on a good site in Albertville could capture about 40% of the Market Area
~emand, demonstrating demand for 9 units of memory care in 2008 increasing to a 22 units
in 2013.
Based on our knowledge and understanding of the market for memory care housing in the area,
we are aware there are other facilities with memory care units that are performing well. We
believe there is demand for memory care units would especially be derived from customers with
ties to Guardian Angels and from those who move to the facility where one spouse requires a
care level different than the other.
Elderlv Waiver Proe:ram
Many of the seniors in the Market Area will need to receive supplemental income in order to af-
ford senior housing with services. While some of these seniors will receive income from the sale
of their home, others will need to rely on other sources of public aid. The Elderly Waiver Pro-
gram provide public funding for seniors who wish to receive "alternative" care that allows them
to stay in the community as opposed to receiving similar care at a nursing home. The Minnesota
Department of Human Services operates the Elderly Waiver Program under a federal waiver to
Minnesota's Medicaid State Plan. Individual counties administer the program.
The Elderly Waiver Program funds home and community-based services for people age 65 and
older who are eligible for Medical Assistance (age 65+ with income below $1,040 per mon and
assets below $3,000) and require the level of medical care provided in a nursing home,
choose to reside in the community. The Elderly Waiver cost for an individual ca
than the estimated nursing home cost for that same individual (according to inti
Minnesota Department of Human Services, the estimated average monthly nurs
the lowest case-mix rating in the four Wright County nursing homes is $3,570).
MAXFIELD RESEARCH INC.
32
CONCLUSIONS AND RECOMMENDATIONS
Based on income data in Table 3, we estimate that only about 120 older seniors in the Market
Area would income/asset qualify for the Elderly Waiver Program, initially. Estimating that only
5% of these qualified seniors would need nursing home level care and would also prefer assisted
living/memory care housing over other services (such as remaining in their homes and receiving
home care ser.vices), we find demand for less than 10 units of assisted living from very low in-
come seniors, initially. Over time, however, some existing assisted living residents would ex-
haust their assets and become eligible for the program. Thus, over the long term, assisted living
demand from low income seniors will increase. Be estimate that it will double by 2013 based on
senior growth trends.
Skilled Nursine Need
Guardian Angels has a total of 120 skilled nursing beds at their existing facilities in Elk River.
There is strong demand for these beds in Elk River from the surrounding area, including Albert-
ville. Their total skilled bed admissions per year is nearly 250 people with 11 % of those admis-
sions coming from the Albertville area - as there is no facilities in Albertville or S1. Michael.
Guardian Angels currently has an active waiting list of over 140 people. For every bed that be-
comes available at Elk River facility there are four to five Medicaid eligible people waiting to fill
that bed. The waiting list and percentage of people coming from Albertville demonstrates a need
for skilled nursing beds in the Albertville area.
A study by the AARP Public Policy Institute in October 2007 found that 14% of America's 85+
population are living in skilled nursing facilities. Multiplying the number of 85+ people in the
Albertville Market Area (see Table 2) by 14% results in 38 seniors in 2008 increasing to 58 sen-
iors in 2013 that would potentially need care in a skilled nursing facility.
It is Maxfield Research's opinion that if Guardian Angels is able to purchase 30 skilled nursing
beds and include them in the proposed facility, that they would be occupied in a short period of
time, either by transfers from the waiting list for the existing facility, with seniors currently liv-
ing in other facilities who would prefer to live within their community and close to their families,
or adult children residing in the area that move their parents to be closer to them.
Conclusions
Based on our assessment of the market dynamics affecting demand for senior housing in the Al-
bertville Market Area, we believe that sufficient demand exists to support the development of a
new senior housing facility on one of the top two selected Sites in Albertville. Our calculations
of market rate senior housing demonstrate that demand exists in Albertville for approximately 46
units of congregate care, 20 units of assisted living, and 9 units of memory care in 2008 (See Ta-
ble 10).
Construction for the proposed senior facility by Guardian Angels is projected for
building opening in 2010 at which time demand is projected to exist for approx(di
of congregate care, 26 units of assisted living, and 14 units of memory care. By"'2
MAXFIELD RESEARCH INC.
33
CONCLUSIONS AND RECOMMENDATIONS
be market rate demand for 66 units of congregate care, 36 units of assisted living and 22 units of
memory care. Including low-income seniors who would utilize Elderly Waivers, demand for as-
sisted living and memory care housing would increase by about 10 units initially, and by up to 20
units by 2013.
TABLE 10
SENIOR HOUSING DEMAND
ALBERTVILLE
2008,2010 and 2013
2008
II 2010* U
Congregate 46
Assisted Living 20
Memory Care 9
* Buildin 0 en
Source: Maxfield Research
54
26
14
2013
66
36
22
A survey of the existing senior housing facilities located in and around the Market Area revealed
low vacancy rates. Furthermore, the recommended Site location is appropriate for senior hous-
ing, and the familiarity and excellent reputation of Guardian Angels will have a substantial draw
, 'with seniors in and around the Albertville Market Area.
It should also be noted that there is the proposed senior facility by Trident Development in St.
Michael. We did not subtract this proposed 72-unit from our demand calculations because of its
preliminary nature and the fact that it may not be developed. If it does move forward, it would
present some competition for assisted living and memory care housing with the proposed build-
ing by Guardian Angels in Albertville. Because of the familiarity and excellent reputation of
Guardian Angels in the area, the proposed building in Albertville would have a competitive ad-
vantage.
Recommended Development Concept
Based on our research and demand calculations, we recommend a building with about 88 units
including 70 "catered living units" and 18 memory care units. Our recommended unit mix, sizes
and rents are shown in Table lIon the following page.
A catered living facility provides a permeable boundary between congregate and assisted living
care in which the units and spatial allocations are undistinguishable between the two senior hous-
ing products. Residents are allowed to select an appropriate service level upon entry to the facil-
ity and subsequently increase service levels over time. The proposed property should a resi-
dents to remain in congregate units and increase their service levels to assisted livi sif
need be rat~er than n:oving to a smaller assisted livin~ unit: The catered livin \~l
appeals to smgle semors but also to couples; each reSIdent IS able to select a se ..
priate for his or her level of need, while still continuing to reside together.
MAXFIELD RESEARCH INC.
34
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CONCLUSIONS AND RECOMMENDATIONS
Based on our demand calculations, we estimate that when the building opens, about one-third of
the catered living residents would be receiving an assisted living level of services. This will in-
crease over time as the resident population ages in place.
We recommend that the building incorporate the following amenities:
. Large community room for meals and activities;
. Non denominational chapel;
. Small exercise room;
. Hobby/craft room;
. Lounges on each floor;
. A media system integrated into the community room for movies and other entertain-
ment.
. Ledges outside of unit entrances, to set down groceries and other items when entering
units;
. Storage lockers either in the building or in the garage area; and
. The availability of a guest suite that can be utilized by friends and family of residents
residing anywhere in the campus.
We recommend that the all the units incorporate the following unit features when possible:
. Individually controlled heat and central air conditioning;
. Kitchen appliances including: a medium-size refrigerator, vented oven/stove, dish-
washer, and garbage disposal;
. Adequate drawer and cabinet space;
. Walk-in shower;
. Raised toilets;
. Raised electrical outlets;
. Level door handles; and
. Window coverings.
For catered living we recommend a mix of studio, one-bedroom, one-bedroom plus den and two-
bedroom units ranging from 450 to 975 square feet. Base level services in congregate units
should be priced from $1,600 to $2,600 with the option to purchase additional services as
needed. For the assisted living level of services, we recommend base monthly fees ranging from
$2,300 to $3,300 with the option to purchase additional services as needed. The following para-
graphs outline our recommendations on the level of services that should be included in the
monthly fee for congregate, assisted living, and memory care residents.
MAXFIELD RESEARCH INC.
36
CONCLUSIONS AND RECOMMENDATIONS
Con2:re2ate (Ii2ht services)
The majority of residents will not need to utilize extra meals and additional housekeeping ini-
tially. However, as the resident's age in place, extra services should be offered on an a la carte
basis or through a tiered service package pricing system as they choose additional meals and
care.
The following services should be included in the basic monthly fee:
· All utilities (except telephone), including basic cable TV;
. Activities program;
· Scheduled transportation;
· Basic health support services; and
. 24-hour staff supervision.
. One daily meal;
· Availability of additional meals on an optional basis;
. Bi-weekly housekeeping;
· One parking stall per unit
Additional transportation, housekeeping, personal laundry, and medication reminders, and vari-
ous therapies should also be available for additional fees.
Assisted Livin2 (heavv services)
For heavy services we recommend including the following services in the monthly fee:
· All utilities (except telephone), including basic cable TV;
· Activities program;
· Scheduled transportation;
· Basic health support services; and
· 24-hour staff supervision.
· Initial care needs assessment with periodic wellness checks;
· Three daily meals plus snacks in dining area;
. Weekly housekeeping;
. Laundry and linen services;
· Medication reminders and setup;
· Assistance with scheduling medical appointments and arranging transportation; and
Additional personal care services should be made available either a-la-carte or through a tiered
service package pricing system.
MAXFIELD RESEARCH INC.
37
, ,
.
CONCLUSIONS AND RECOMMENDATIONS
Memorv Care
We recommend the development of 18 units of memory care. We have recommended 16 studio
units ranging from 420 to 500 square feet and two one-bedroom units at 600 square feet. Base
level services should be priced from $4,400 to $4,700 monthly and should include:
. All utilities (except telephone), including basic cable TV;
. Activities program;
. Scheduled transportation;
. Basic health support services; and
. 24-hour staff supervision.
. Initial care needs assessment with periodic wellness checks;
. Three daily meals plus snacks in dining area;
. Daily housekeeping;
. Laundry and linen services;
. Medication management;
. Basic personal care services and hygiene assistance (we recommend two
baths/showers per week);
. Activities, including passive and stimulating programming; and
. Assistance with scheduling medical appointments and arranging transportation.
Additional personal care services should be made available either a-la-carte or through a tiered
service package pricing system.
Potential for Adult Davcare in the Subiect Development
Guardian Angels has an existing adult day care located in Elk River called Angels on Main. It
serves an average of 200 client days per month or 10 clients per day. A representative of Angels
on Main feels that the facility grew quickly and has been successful because it was started by the
Guardian Angels Home Health Care program and allowed them to serve needs of residents in
that program who would benefit from an adult day care facility as well as word of mouth adver-
tising in Elk River and the positive reputation of Guardian Angels organization in the Elk River
area.
We believe there is potential in the market for adult daycare to be located within the proposed
facility. Transportation for clients should be offered and services should be available through the
seniors building's catered living program. The room to be used for Adult Daycare in the pro-
posed building could be a multi-use room but should have some specific amenities as recom-
mended by a representative of Angels on Main. Ideally the room should have a kitchen area with
stove, oven, sink, and refrigerator for activities such as cooking and arts and crafts. The room
also should have a living room style area to allow for relaxation and discussion. An imperative
component of the room must be a bathroom attached to the room that is handicapped ac ible.
This is important as it allows staff members to remain within monitoring distance of
while assisting in the bathroom.
MAXFIELD RESEARCH INC.
38
r"
CONCLUSIONS AND RECOMMENDATIONS
~
Competitive Advantages of the Recommended Concept
The competitive advantages noted below should allow the project to enjoy a reasonable absorp-
tion period and maintain strong occupancy.
· The catered living concept will provide a sense of security for residents of the independent
senior buildings by allowing residents to remain in the same (familiar) community as they
age and need more services. Furthermore, the concept also allows for couples that need
varying degrees of care to reside in the same unit.
· There are currently few senior housing options in the Market Area. The addition of a new
senior housing facility with complementing amenities and services will be favorable to those
shopping for senior housing around Albertville and is likely to draw seniors with adult chil-
dren living in Albertville from other communities.
· The units will have lower turnover rates and increased marketability by allowing residents to
purchase the service levels appropriate for their needs while remaining within the same facil-
ity and, on most occasions, in the same unit.
· The Site adjacent to the Cottages of Albertville would provide a feeder system for a new
building as well as generate additional fee income from any services purchased by residents
of the Cottages of Albertville.
· The appeal of the proposed facility would be strengthened if it were to include skilled nurs-
ing beds and adult day care. Couples could be accommodated by the facility when one
spouse needs skilled nursing care and the other more independent living.
Projected Absorption
Based on our review of the current and projected housing needs of senior households and our as-
sessment of the existing competitive market, we believe that the recommended catered living and
memory care concept should experience steady absorption of units.
For the recommended 70 units of catered living, we forecast that stabilized occupancy (95%)
would be reached within 15 to 18 months of initial occupancy. This assumes that 20% of the
units (14) would be pre-leased and that the remaining 53 units would be leased at an average rate
of3.0 to 3.5 units per month.
We forecast that the 18 memory care units would reach stabilized occupancy (93%) in nine to
fourteen months of initial occupancy. This assumes that 20% of the units would be preleased
and that the remaining seven units would be leased at an average rate of 1.0 to 1.5 units
month.
39
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We assume that no other competitive product is marketing simultaneously withlli
erty and that the building opens in spring or early summer. If the proposed senior "
MAXFIELD RESEARCH INC.
(
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CONCLUSIONS AND RECOMMENDATIONS
Trident Development in St. Michael moves forward and is marketing during this proposed facili-
ties initial lease-up period then the result would be slower absorption for both facilities. Again,
we believe that the proposed building would have a competitive advantage because of the famili-
arity of Guardian Angels by area seniors and its excellent reputation. In addition, we believe that
the proposed Guardian Angels facility, if developed on Site 1, would have a natural feeder be-
cause of the adjacent Cottages of Albertville (lOO-unit independent senior townhomes), thereby
expanding the competitive advantage of this proposed facility.
If the Trident Development moves forward, we anticipate that the projected absorption rates
shown above would be extended by about three months for the catered living units and by up to
six months for the memory care units. The absorption of catered living units would be impacted
less since the facility by Trident Development is proposed to be primarily assisted living and
memory care units, and only a few congregate units.
Marketing literature should stress the campus setting and the availability of a continuum of care
for seniors to age in place Absorption estimates assume you have an aggressive marketing cam-
paign, including architectural renderings and marketing signs located at the Site.
Marketing Considerations
The quality and extent of the marketing effort will determine the rate of leasing. We recommend
'the following marketing schemes:
· Begin the marketing effort at least a year prior to opening, escalating to full-scale six months
before grand opening. Seniors who need extra income through the sale of their home might
need six months or more to prepare their home for sale and to find a buyer, especially if the
home is older, smaller, or in need of repair. With residents who have paid a deposit to re-
serve a unit, keep them updated on the progress of construction.
· Develop attractive brochures detailing information on support services, building design, fea-
tures, amenities, and monthly fees. These items should be made available at the time market-
ing begins, preferably at groundbreaking.
· It will be important to market to the caregiver population (persons 45 to 64), particularly the
more affluent caregiver households. We recommend the creation of at least one marketing
brochure that speaks directly to adult children who will guide the decisions of their senior
parents; this brochure would recognize their perspective, addressing their concerns and pre-
senting the benefits to them.
· Open houses and tours should be implemented to give area seniors and caregivers a chance to
become acquainted with the development.
40
· Utilize referral networks within the Market Area (i.e. hospitals, clinics, soc.
health agencies, senior centers, churches and even other nursing homes) to
MAXFIELD RESEARCH INC.