How can a power player in one distinct market expand into a new region successfully? One senior housing provider based in the Midwest is newly qualified to answer that question — and has further expansion plans for the future.
Bloomfield Hills, Michigan-based American House Senior Living Communities recently announced ground breaking on the last phase of its Bonita Springs Senior Living community in Bonita Springs, Florida (pictured). The company now has 38 properties in Michigan, one in Illinois and four in Florida.
American House’s Michigan properties are spread out between 23 cities in the Detroit metropolitan area, six cities in western Michigan and two cities in northern Michigan.
The company is a true “power player” in its original market—that’s the language that CEO Dale Watchowski uses, and the numbers back it up. In fact, not even the largest senior living provider in the country, Brookdale Senior Living (NYSE: BKD), has so much concentration in any one market, according to Aaron D’Costa, director of acquisitions-senior living at Virtus Real Estate Capital, which counts 15 American House properties in its portfolio.
The decision to expand into a new region therefore is even more notable for American House than it might be for a different provider, and the story of why and how the Detroit stalwart has undertaken the growth includes some lessons for other operators eyeing new markets.
One takeaway: American House stayed closer to its home base for its first growth spurt. Dale Watchowski, CEO of American House, told Senior Housing News he counts the move into the western and northern parts of the state as the company’s first real expansions.
When deciding to expand into these markets, Watchowski said the company knew these regions would be “good places to retire” due to the popularity of cottages in the state.
So, why the expansion into Florida? The thinking ran along the same lines. American House opted to expand into southwest Florida because that’s where many Midwesterners travel for vacation, Watchowski said.
Still, expansion into new markets is not without its challenges. Streamlining meetings among employees can be a challenge, especially when everyone who has to attend is spread out across the country, Lisa Brush, executive vice president of operations for American House, told SHN. Brush also serves as president of Symphony Senior Living, a Toronto-based operator of six senior living communities in Ontario, Canada.
Maintaining the company’s core values during expansion can also prove challenging, Brush said. In her opinion, though, American House “hasn’t forgotten who it is” as it expands. The company operates under a model of providing affordable senior living to the middle market.
Importantly, the population in southwestern Florida matches the resident demographic American House serves in terms of cost.
“Contributing to our success is that we have no entrance fee, and we’re affordable due to our low cost of construction,” Watchowski explained.
It may also help that American House has key players on the ground in the region; company founder Bob Gillette currently resides in Bonita Springs.
Going All In
Another aspect of American House’s model also remains consistent in the expansion: Striving to be a notable player in the markets it enters—a feat that the provider has achieved in Detroit. As Watchowski told SHN, American House wants to go into a new market and quickly gain a significant part of the market share.
“The reason we are successful in southwest Florida is that we got in early, and we got in with a significant presence,” Watchowski said.
Construction on American House’s community in Ft. Myers, Florida, is scheduled to begin soon, Watchowski told SHN. The company’s Coconut Point community in Bonita Springs, Florida, is still under construction.
American House has also acquired a community in Zephyr Hills, Florida, and converted it to the American House brand, Watchowski said.
The pattern of American House establishing a sizable footprint in the markets it enters could give some idea of what to expect in other areas where the provider is venturing, including one of the nation’s largest metros.
Going forward, American House plans “to establish a very significant presence in Chicago,” Watchowski told SHN. The company’s sole property in the Chicagoland region is currently in Plainfield, Illinois.
Additionally, the company is “constantly looking at both acquisitions and sites for development,” Brush said, though she did not disclose specific numbers.
“We’ve got quite a bit in the pipeline, in the development group and the acquisition group,” Brush said of American House.
But she emphasized that company leaders are concentrating on Florida and the Midwest, maintaining a disciplined approach even as the company grows well beyond its cradle in Detroit.
Written by Mary Kate Nelson