With a planned project in the Washington, DC market, Benchmark Senior Living is moving forward with one of its first projects outside of New England.
But for Benchmark’s founder, chairman, and CEO Tom Grape, this growth strategy has been in the making for more than two decades.
“This is Benchmark’s 25th year, and for every 25 years I describe Benchmark as a Boston to Washington company, even though we’ve only operated in the top half of that region,” Benchmark Grape said during a discussion in the 2022 Senior Housing News BUILD conference. “We’re just starting to fill in the bottom of this geography … so it doesn’t feel like a stretch or a shift to me.”
For Benchmark, expanding into the DC-area market from Alexandria, Virginia helps propel the company into its next chapter as a company expanding the length of the “Amtrak Corridor,” where it estimates a quarter of the US population lives .
Additionally, Grape’s vision is to make aging ‘less visible’, meaning that it is woven into the fabric of society. This is reflected in the Company’s recent projects, including that in Alexandria.
As a regional operator, Benchmark has served us 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 materially change this strategy anytime soon.
“If an attractive portfolio of one or two properties outside of this region comes along, we might consider that,” Grape said. “But we’re not interested in expanding beyond the Boston-Washington corridor.”
The cornerstone of Benchmark’s regional growth strategy is careful planning. This is illustrated in part by the fact that the operator spent years refining its growth strategy before heading south to DC
As planned, the project in Alexandria is a 10-story high-rise building with assisted living and memory care units. Facilities include a club room, bistro, wine tasting suite, penthouse level cafe and rooftop terrace.
Residents will also have access to a wellness center where staff will assist in arranging and facilitating healthcare services such as doctor visits. and Grape said the company is in discussions with local hospital systems about potential collaboration opportunities.
Benchmark also recently opened a new community in Hanover, Massachusetts; and another preparing to break ground in New Hampshire.
As a regional operator, there are many places Benchmark doesn’t go. For example, Grape said the company has turned down requests to take on new projects in the U.S. southeast and even overseas in markets in China and Australia.
In examining markets for expansion, Grape said the company is looking for locations that have “proximity and visibility” for adult children, as well as those that are easily accessible for prospective employees.
Like many operators in 2022, Benchmark is grappling with higher development and construction costs and a tough credit environment. But unlike some others, the company continues to advance its development growth strategy, particularly in markets with high barriers to entry where many people share the same socioeconomic background.
“We will continue to…keep our pipeline active and see what else we can get going,” Grape said.
Benchmark has plenty of room for further expansion down the corridor, with untapped potential in markets in New Jersey, Maryland and other states between its current presence in the Northeast and its new community in Northern Virginia.
Making senior living “invisible”.
Benchmark’s strategy of maintaining a narrow regional footprint aligns with how Grape sees the seniors of tomorrow.
According to Grape, baby boomers are looking for a customizable senior living experience that is embedded in the surrounding community, rather than buildings that stand out as senior living.
“I think there’s a movement to drop ‘senior.’ [from senior living] and call it something else,” Grape said. “And I think it will undoubtedly stay that way.”
Baby boomers, he said, want to have all the choices in their senior years that they’ve had their entire lives.
“They want mixed use, they want rural low-rise,” Grape said. “They don’t just want to pay rent for assisted living, they want to finance it and buy it, or they want to pay for it on credit.”
Wellness is a big trend for both Grape and Benchmark — and the company defines that term “broader than just the nurse’s office,” Grape said. In fact, he added that he sees wellness as an “essential part of the premise of living in old age.”
“We have wellness programs that go beyond physical health but address holistic health,” he said. “We believe that human connection is central to wellbeing, both human connection with employees and with their families.”
He also sees a promising future for the industry in cross-generational concepts. Benchmark currently has an assisted living community with an integrated preschool component. In addition to apartment buildings for all ages, a grocery store and a restaurant, the future community in Alexandria will also be close to a local preschool.
Grape also believes that communities at or in collaboration with academia hold great promise for the future of the industry as it matures in the years to come.
In general, he believes the industry is in a similar place to the early auto industry; when customers started demanding more car choices.
“Now, different market segments of consumers are beginning to express their desires for different types of products,” Grape said.
He noted that today’s customer can find many different types of places to live, from communities geared towards LGBTQ residents to communities with diverse cultures and backgrounds. And looking ahead, he believes the industry will continue to cater to these unique preferences.
“We’re going to see much greater fragmentation and segmentation coming, which I think is a great thing,” Grape said.
SMEs a “tough challenge”
For years, the senior housing industry has attempted to meet the needs of millions of older adults who will likely not be able to afford senior housing in the future; a cohort referred to as the middle class. But Grape doesn’t see any easy solutions here.
“To run a true middle class … I don’t see how you can do that without some kind of subsidy or tax credit program or something,” Grape said.
Grape estimates that for every dollar of income that a serviced community brings in, 70 cents is allocated to operating expenses and another 20 cents to debt service, leaving only 10 cents for cash flow and/or profit.
He added that even if he got a new community for free, it would still be difficult to bring the cost down to mid-market rates given the complexity of care and services.
“You don’t reach the middle class even with a free building,” Grape said. “Then when you start skimping too much on services, you’re not really providing the full description of assisted living anymore.”
Benchmark operates a small number of communities under the brand name The Branches, with rates approximately 20% lower than the market. The company was able to achieve this through smaller square footage and other operational improvements.
Nevertheless, that is “far away from the true middle class,” said Grape.
“The middle class is a difficult challenge,” he added.