With a planned project in the Washington, D.C. market, Benchmark Senior Living is forging ahead with among its first projects outside of New England.
But for Benchmark Founder, Chairman and CEO Tom Grape, that growth strategy is more than two decades in the making.
“This is Benchmark’s 25th year, and for all 25 I’ve been describing Benchmark as a Boston-to-Washington company, even though we’ve only been in the top half of that geography,” Benchmark Grape said during a discussion at the 2022 Senior Housing News BUILD conference. “We’re just now starting to fill out the lower part of that geography … so, to me, it doesn’t feel like a stretch or a change.”
For Benchmark, the expansion to the D.C.-area market of Alexandria, Virginia, is helping to propel the company to its next chapter as a company that extends the length of the “Amtrak corridor,” where he estimates a quarter of the U.S. population lives.
Beyond that, Grape has a vision to make senior living more “invisible,” meaning it is woven into the fabric of society. That is reflected in the company’s recent projects, including the one in Alexandria.
Being a regional operator has served Benchmark well over the years, and today the Waltham, Massachusetts-based operator has a portfolio of 64 communities. Given its success and scale, Grape has no plans to significantly change that strategy any time soon.
“If an attractive portfolio came along that had a property or two outside of that geography, we might consider that,” Grape said. “But we’re not interested in expanding beyond the Boston to Washington corridor.”
The cornerstone of Benchmark’s regional growth strategy is careful planning. That is partly exemplified by the fact that the operator spent years honing its growth strategy before heading south to D.C.
As planned, the project in Alexandria is a 10-story highrise with assisted living and memory care units. Amenities include a club room, bistro, suite for wine-tasting, penthouse-level cafe and rooftop deck.
Residents will also have access to a wellness center where staff will help arrange and facilitate health care services, such as physician visits; and Grape said the company is in discussions with local hospital systems on potential ways to collaborate.
Benchmark also recently opened a new community in Hanover, Massachusetts; and has another that is getting ready to break ground in New Hampshire.
As a regional operator, there are plenty of places Benchmark won’t go. For instance, Grape said the company has rebuffed requests to take on new projects into the Southeastern U.S., and even overseas into markets in China and Australia.
When examining markets for expansion, Grape said the company looks for sites that have “proximity and visibility” for adult children, as well as ones that are easily accessed by future staff.
Like many operators in 2022, Benchmark has grappled with higher costs of development and construction and a tough lending environment. But unlike some others, the company is still forging ahead with its development growth strategy, particularly in high-barrier-to-entry markets where many people share the same socioeconomic backgrounds.
“We’re continuing to … keep our pipeline active, and see what else we can get going,” Grape said.
Benchmark has plenty of room to expand further in the corridor, with untapped potential in markets in New Jersey, Maryland and other states between its current Northeast presence and its new community in Northern Virginia.
Making senior living ‘invisible’
Benchmark’s strategy of keeping a tight regional presence aligns with the way Grape sees the senior population of tomorrow.
According to Grape, the baby boomers are looking more for a customizable senior living experience that is woven into the surrounding community as opposed to buildings that stand out as senior living.
“I think there is a movement to drop ‘senior’ [from senior living] and call it different things,” Grape said. “And I think that will undoubtedly continue.”
Baby boomers, he said, want all the choices in their senior years that they’ve had throughout their lives.
“They want mixed-use, they want low-rise rural,” Grape said. “They want to not just pay rent for assisted living, they’re going to want to finance it and to buy it, or they’re going to want to pay for it on credit.”
Wellness is a big trend to Grape and at Benchmark — and the company is defining that term “more broadly than just the nurse’s office,” Grape said. In fact, he added that he sees wellness as an “essential part of the premise of senior living.”
“We have wellness programs that are beyond physical health, but are into holistic health,” he said. “We think human connection is a central part of wellness, both human connection with staff and with their families.”
He also sees promise for the industry’s future in intergenerational concepts. Benchmark currently has an assisted living community with an included preschool component. The forthcoming community in Alexandria also is planned to have proximity to a local preschool in addition to all-ages multifamily units, a grocery store and a restaurant.
Grape also believes that communities on or collaborating with college campuses hold promise for the industry’s future as it matures in the years ahead.
In general, he believes the industry is in a place similar to the early auto industry; when customers started demanding more choices for cars.
“Now, different market segments of consumers are starting to express their desires for different kinds of products,” Grape said.
He noted that the customer of today can find many different kinds of places to live, from communities that cater to LGBTQ residents to those centered on different cultures and backgrounds. And as he looks ahead, he believes the industry will continue to cater to those unique preferences.
“We’re going to start to see a much greater fragmentation and segmentation coming, which I think is a great thing,” Grape said.
Middle-market a ‘tough challenge’
For years, the senior living industry has sought to address the needs of the millions of older adults that likely won’t be able to afford senior living in the future; a cohort referred to as the middle market. But there, Grape sees no easy solutions.
“To do true middle market … I don’t see how you do it without some kind of subsidies or tax credit program or something like that,” Grape said.
Grape estimates that for every dollar of revenue an assisted living community brings in, 70 cents is allocated for operating expenses with another 20 cents needed for debt service, leaving just 10 cents for cash flow and/or profit.
He added that even if he were to receive a new community at no cost, it would still be difficult to bring costs down to middle-market rates given all of the complexities of care and services.
“You don’t reach the middle market even with a free building,” Grape said. “Then, if you start to chip away too much in services, you’re no longer really providing the full description of assisted living.”
Benchmark is operating a small number of communities under the brand name The Branches with rates that are approximately 20% lower than the market. The company was able to achieve that through smaller square footages and other tweaks to operations.
Still, that is a “long way from the true middle-market,” Grape said.
“Middle-market is a tough challenge,” he added.