2022 has begun. We are almost two years out from one of the greatest disruptions to our industry and providers are still feeling the downstream effects. As we look back on 2021, we recognize it was a year for deep change – maybe even more so than 2020. So, we are all asking ourselves harder and more introspective questions to determine our go-forward steps. Some may see these past several years as “lost” years. We do not. We all saw resilience, commitment, passion, new thinking, new pathways developed and yes, renewed momentum. Our clients’ 2021 was robust, full of dealing head-on with a changing world, overcoming challenges, and preparing for the future.
In 2021, Greystone helped clients begin construction on over 1.3 million square feet of exciting new assets and guided nine providers as they turned over 900 units to operations. We also assisted 25+ providers in better serving their markets and mission. These actions all contributed substantially to new jobs and opportunities.
This accomplishment was not without its challenges. Construction and labor costs increased by roughly 6% and 4.5%, respectively. It’s no secret that everything’s costing more, from milk and gas to labor and construction materials. The unprecedented volatility in labor, material costs, and supply chain issues will continue throughout 2022. Greystone is prepared to deal with these challenges.
During the pandemic, the media influenced and supported the rhetoric that aging in place was the safest option for seniors. Senior living campuses were described as “hotbeds of COVID”, leaving many providers worrying that this would severely impact occupancy, deposits, and move-ins. While that impact was seen in the very early days, it’s not what we are experiencing now.
2021, Greystone clients collected over $200 million in entrance fees, with another $311 million in presale commitments for future move-ins. As staff vaccination rates increased, we saw current residents become more comfortable moving around the campus without masks (except in health care,where masks are still required), and prospective residents became less wary to reserve their spot, leading to almost 2,000 10% deposits in 2021. We expect 2022 to be even better.
67% of midlife and older adults who recently shared their opinions with the International Council of Aging stated that they see senior living communities as a safe place to live.
McKnight's Senior Living Magazine | November/December 2021
For operations teams, the biggest challenges in 2021 were maintaining a safe environment and responding to staffing challenges and rising wage rates. Many providers were asking us, “How do we make our margins without substantially increasing resident fees?” We think the question should be, “How can we best communicate our value to our residents in a way that helps them come to terms with unavoidable fee increases?” We believe your residents will accept fee changes that help the staff they know and rely on to receive a living wage. The art is in the communication and listening.
So how do organizations adjust? With high wage rates and spikes everywhere, many providers chose to execute off-cycle pay adjustments to remain competitive, especially in healthcare positions. While this is a great strategy in the long-term, providers should prepare to evaluate their current services and care levels and consider changes that adapt to morbidity trends. Other options include investing in training and professional development, exploring and implementing tech solutions for increased efficiency, and seeking constant feedback from staff and residents – all of which have been shown to help overcome staff “burnout”.
Planning & Finance
Notwithstanding managing through the pandemic, many Greystone clients remained steadfast by continuing their growth plans. In 2021,our team consulted an almost record number of clients on new growth initiatives, proving a positive uptick in activity and highlighting the impact of strong leadership. Our clients also secured close to $500 million in financing for redevelopments, expansions, and new campuses. Yes, we have planned for a changing interest rate environment and do not expect the interest rate increases to curtail good development.
Some providers are even moving into entirely new markets. Presbyterian Manors of Mid-America, who operates 15 senior living communities and 2 hospices across Kansas and Missouri, has recently expanded their reach into Colorado. Their newest campus, Aberdeen Ridge, will be the first life plan community in the Colorado Springs market and is expected to open to residents beginning in 2023.
All in all, our clients and team of Greystone’s professionals had a busy, productive, not always fun 2021. We learned, persevered, and helped our clients move forward regardless of the circumstances. That’s what we have done for the last 40 years and what we will continue to do in 2022 and beyond.
Mark Andrews and John Spooner | Co-CEOs