Magazine article Journal of Property Management
Making Senior Housing Affordable
Assisted Living Concepts of Portland, Ore., is in the vanguard of making seniors housing more affordable. The company's cost per unit ranges from $55,000 to $70,000, depending on the region of the country. Comparable space in the same regions is likely to be $90,000 to $120,000 per unit, says President and CEO Keren Brown Wilson. For each $10,000 of construction costs, it costs the consumer roughly $100 a month in rent or shelter cost, she says.
Yet, despite lower costs and rents, the single-occupancy facilities offer equipped kitchens, accessible bathrooms, and life-safety features such as voice-to-voice call systems.
To hold costs down, the company typically builds in smaller towns, which Wilson believes is an underserved market. "Many older people are living in these smaller communities and their options are very limited," she says. She also works to hold down shared costs with such ideas as using the residents' laundry room in off hours to wash linens for the property.
The company employs a variety of cost-saving strategies. To keep raw land costs down, the it looks for residential rather than commercial locations. "We're not fighting over that piece of land with Marriott or Taco Bell," says Wilson.
Another important factor is efficient design. Its facilities are all single-story, so no elevators or stairs are needed. They have eliminated common spaces such as private dining rooms and exercise rooms that are not for the benefit of residents but are marketing devices to impress their children, says Wilson. The laundry room available to the public was designed to meet licensure requirement for the facility laundry so it too does double duty. "We've really thought through how to reduce the square footage needed to achieve the purposes. We've designed it to work, to be pretty, but functional.
Most of the company's development is outsourced, enabling it to keep internal development costs low. Fixed prices, "not to exceed" bidding, and well-thought-through specs that impose value engineering on the contractors all help to keep costs down.
One of biggest areas that gets out of control is soft costs, Wilson asserts. The company sets fees as a fixed rate and saves in volume purchases of services such as due diligence approvals. …