Two senior living centers vying to make Prescott home
Two senior living centers are planning to make Prescott their new home, but it is unclear if there is room for both.
A development group behind Select Senior Living in Coon Rapids, Minnesota and Hearth Development — a St. Paul-based development company that focuses on senior living projects that has a facility in Ellsworth — both want to build senior living centers in the centerless community. However, a market study commissioned by the city last year and developers say there might not be enough demand for both to succeed.
"If they say there isn't enough demand, I can't say that," said Prescott Mayor David Hovel. "I know there is a lot of senior citizens in Prescott who want to stay."
The Select Senior Living development would be located at Orrin Road and Linn Street and have about 60 units, with about 20 to 25 percent of those devoted to memory care and the rest for assisted living. The Hearth development would be located at 445 Court St. and have about 50 units, with 10 of those devoted to independent living, 16 memory care units and the rest for assisted living.
The projects in total would bring over 110 units, but a market study finds that the region, while ready for a senior-focused project, might not have room for both plans.
Overfilling demand in a desirable market
Senior living projects boomed after the recession as a way of making economic downturn-resistant investments in an undersupplied market, said CBRE Vice Chairman Aron Will, who works in the international real estate company's senior housing division.
Over time though, senior housing became oversupplied in metro areas — like the Minneapolis metro area which Will said is viewed as oversupplied compared to demand — where construction was focused. Instead, senior housing investment has focused on secondary and tertiary markets recently.
"Seniors are everywhere," Will said. "Investors are a lot more comfortable with [secondary and tertiary markets.]"
In December 2017, the city of Prescott commissioned a study of the area's senior housing market — defined as north of Prescott, a few miles northeast of Ellsworth and south to Bay City. It found that the area's senior population, 65 and older, is estimated at 2,866 for 2018 and the research firm projected it to increase by 21.7 percent or to 3,486 by 2023.
The study projected the market population's demand — across independent living, assisted living and memory care — to be at 84 units in 2018, and increasing to 105 by 2023. Combined, the two projects would have over 110 units devoted to senior care, and it is unusual to build higher than demand, Will said.
"As a general rule of thumb you want to stay under," he said, but noted developers take in mind future projections.
Greg Johnson, chief manager of Hearth Development, said the Prescott market is a strong fit for senior-focused development.
The city's study found that there is only one other planned project in Prescott's market, and there are eight other facilities in the region currently operating.
"At this point, it's underserved," he said. "There aren't really a lot of options for Prescott's [senior citizens.]"
The Prescott City Council green lit the Select Senior Living project, pending lighting, in early September. Construction is set to start the second week of October and would be finished in 10 to 12 months, said Gary Augustine, executive director of the company.
The Hearth Development project lags slightly behind Augustine's and last met with the city in July. The company hopes to get city approval later this fall, open up construction early in 2019 and finish within a year, Johnson said.
Both Johnson and Augustine agreed that the market can't support both of their projects.
"[Prescott's region] is a good market, but I don't know that both projects will be able to move," Johnson said.
Hovel said the city would likely approve both if they meet the requirements, despite the market details.
"I don't think it's the city's place to shoot down competition," he said.
However Augustine, who lived in Prescott in the early 2000s, disagreed and said it wouldn't make sense for either his team's or Johnson's project to go ahead if the other is building. He said he would need some form of "assurances" from the city, but said construction would go forward as planned.
"Why would I let someone come to town with a good business model and then risk that by letting someone else compete?" he asked rhetorically. "I can't tell you what the problems might be, that's all speculation anyway."
Johnson declined to comment on how Augustine's project affected his group's plans.