Plan for Phase II Expansion
​
If possible, try to secure an option to build a future expansion of your senior living project. As I have previously mentioned, the hardest thing about developing a senior living facility is finding the land - a site with the right demand for the area and at a feasible price. If you plan for a Phase II expansion at the beginning of your initial project, you will build in the possibility of a future second project.
​
When you are planning your senior living project, you will likely only be able to build a project big enough to meet the current demand for a certain location. Your 3rd party marketing study will tell you what the current demand is for a given site. A developer typically only wants to build a building to meet the current demand. And your investors and bank will probably only allow you to build a building big enough for the current demand. Senior living development is speculative enough, you don't want to add risk by building a facility that is too big. But as time passes, that demand could grow. Or your 3rd party marketing study could have been off and there is more demand than expected. The original facility you built could become full, and you would love the option to expand your existing facility to further capture the extra demand in the area. Phase II of your development may or may not happen, but it is good to have an option in place if the demand is there.
​
The two main things you need to plan for with a potential Phase II expansion are to have enough land, and to design Phase I so that Phase II can be added easily.
​
For the land, you can buy the extra land you will need for Phase II during the initial Phase I land purchase and just leave it as green space until you are ready to build Phase II. Or better yet, you can try to get a purchase option on this adjacent Phase II land from your land seller. Having a purchase option is better because you are not outlaying the cash to buy extra land for Phase II - which may or may not ever happen.
The other thing to do is design the Phase I building(s) so that Phase II can be added on to Phase I easily. Tell your architect that, if feasible, you want him to design the buildings so that they can be expanded in the future. To make this problem even harder, you don't know what level of care (IL, AL, MC) might have a greater demand. If possible, be able to expand any, or all, of the three different building types.
Your Phase II building will likely share common amenities and services that are already provided by the Phase I building: kitchen, dinning, swimming pool, gym, theater, etc. You will have a balancing act here. You want to build these Phase I common amenity spaces big enough so they can also service Phase II (especially kitchen and dinning), but you don't want spend too much money making these amenities bigger than needed for Phase I because Phase II might never happen. Again, the solution is to plan these common amenities so they can be expanded.
​
As you are initially evaluating a site for a senior living development, the ability to add a Phase II might not be possible given your land constraints. But every senior living developer should keep an eye out for the possibility to add Phase II, and if possible, work that into his land purchase negotiations.
​
​
Next Page: Development Schedule (Senior Living)
​