New Developer Takes Toyota-Inspired Approach to Senior Living

As outside capital flows into the senior housing space, two partners seasoned in the industry are looking to seize on the opportunities by launching their own development company with a distinct approach to the process. 

Scottsdale Arizona-based Drive Development Partners was recently co-founded by Brendan Morrow and Michael Hass, a pair that have built over 8,000,000 square feet of senior living projects nationwide with The Weitz Company.

After their business plan was passed over by The Weitz Company, the duo decided to go it alone as Drive Development Partners. They eventually hope to build and develop their own senior housing designs in the future. 

Advertisement

“We believe in the industry and the opportunities in it,” Hass told Senior Housing News. “We have to build our business to have the credibility and resumé to attract the capital or build the capital ourselves. The goal is absolutely to do this for ourselves.”

New Opportunities

Currently, the business is operating on a consulting basis and taking advantage of what Hass sees as an expansion cycle. As the demographics and returns for senior housing continue to attract investors from other sectors, the Drive Development team can capitalize on their knowledge and expertise as consultants.

“This is a wave of either catching up from the recession or anticipating the [baby] boomers coming,” Hass said. “Newer people to the industry really value guys like us who know the product.”

The company is currently working with partners on the West Coast and in a handful of other states with major ongoing senior living development. Their clients include operators looking to grow and some non-profit organizations without their own development teams, as well as capital providers new to the space.

“Private equity firms, as they look at the capital allocators, they don’t necessarily know senior living designs,” Hass said. “They question senior living designs, and they look to us to  corroborate their concerns.”

Once the company is working on its own product, Hass hopes to drive innovation, rather than follow the development leaders of other industries. 

“Senior living tends to follow other industries, not necessarily lead,” Hass said. “It feels like there are many opportunities on the surface, but maybe we can be a change agent and help put innovation at the front of senior living development. We don’t purport to be operators, but in the development process, we think there is some opportunity to set senior living apart and do things differently.”

‘Think Differently’

By doing things differently, Hass puts the focus on increasing efficiency in the development process.

“The development process itself, in all real estate classes, tends to be very linear, meaning we do this activity, and when it’s done you can go to the next,” Hass said. “That makes for a long chain of activities. There are opportunities, without adding a lot of risk, to think about that process differently.”

Hass’ ideas stem from the software design from Toyota, which moved away from a rigid, step-by-step process to find more efficient, collaborative ways to deliver quality products. 

“We looked at that software design, called the ‘agile’ methodology, Toyota had pulled out, and tried to use that in the development process,” Hass said. “It turns it upside-down on its head.”

By adapting what was successful about Toyota’s manufacturing process, Drive Development is working to adopt those ideas into senior living construction. 

“There are some tools we put in place to walk our way back through, and what comes out is a more efficient, smoother, more unified schedule,” Hass said. “The real estate industry tends to revert to their decades-long processes. It wants to revert back, and we are small voices advocating for change.”

The change results in a shorter timeline for development and an improved, more balanced workload throughout the process, according to Hass. The changes follow some of the other changes across the senior living industry, including new marketing strategies that aim to sell senior living to adult children, rather than seniors.  

With big development ambitions, Drive Development has to be careful about where it sets up shop. Namely, Hass and his partners need to keep an eye on supply. The industry, which recently reached all-time construction rates as a share of inventory, will likely soon go through a development slowdown, Hass predicts. However, the long-term demand for senior housing units is still strong.

“In the short term, I think there will be a pause or a slowdown,” Hass said. “ Over the next 20 years, we are so woefully short of units in that timeframe that I think the stress of the next two years will pale in comparison.”

Written by Amy Baxter

Companies featured in this article: