Senior Housing Opportunities for Newlands Group
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Since beginning our interviews last year, we have come across one amazing story after another. While no one is enjoying, necessarily, the changes in the present real estate market, they are welcoming the creative opportunities rising from the ashes. Our latest interview with Michael Barnes was an exciting glance at new unforeseen opportunities and investments.
Situated in Reno, Nevada, Barnes was co-owner of Copper Canyon Development, a master planning developer from 2000-2005. Unlike many of his real estate contemporaries, Barnes and his company were able to sell at what turned out to be the height of the market and walk away with not only a profit, but an opportunity for a personal year - long sabbatical that led to a renewed enthusiasm for real estate potential.
Forming a new real estate development company in 2007, Newlands Group LLC, and taking on new partners, they have considered every possible method for land/real estate development popular over the last twenty-five years, and found them no longer effective in today’s market. He chuckles as he states candidly, “We are self/unemployed and looking for opportunities. We are having to feed our investments now until the market turns around and with a lot going out and nothing coming in, we’ve investigated all options. ” After stumbling through attempts to capitalize on the market downturn, they have landed upon the growing need for decent senior housing. With Baby boomers getting older, a considerable percentage of our society is going to need comfortable future housing. Instead of the sterile, tiny, “McDonald’s” cookie cutter standards of current senior housing available today, Barnes, desires to build appealing dwellings based on universal design standards, with outdoor common areas and gardens, adjacent to pathways, storage, garages, and an aquatic center. “I want to build something that I want to end up living in. They existing senior housing in our area is unsatisfactory, and I’m not working my whole life to end up in one of those,” states Barnes.
This is an area he has never before ventured into. Instead of entitling and developing land and selling for profit, this investment requires a long-term commitment of not only development, but operation as well. They envision rental properties, 50% larger in size than currently on the market, geared towards active adult and independent living, with unbundled services adjacent to neighborhood retail, providing part-time job opportunities geared towards seniors. “Operating expenses with such projects are generally greater than 50% of revenues. It’s like running a restaurant, hotel and apartments all with healthcare provisions,” explains Barnes, adding that this project, while smaller in acreage than what he is accustomed to developing, it is far more detailed than anything he has involved himself in adding, “The entire project is people dependant, often with mobility and health issues, and that is where larger companies will lose out; meeting the particular and often delicate needs of the client will either make or break the project.”
There are many challenges, not only as far as developing schemes and limited financing, but also in terms of affordability; the market for seniors able to afford rent between $3,500-$5,000 a month certainly limits their client potential. Yet, regardless of all the hurdles, not only does he see the potential, but also the necessity for this niche market.
While there are many challenges ahead, Barnes believes this to be a more lucrative direction as land development and building probably won’t see a turn around before 2013-2015. While the stimulus package has been initiated, it will take many months before its effects trickle down to the people changing their purchasing power and opening up job opportunities. Not only is the US market to be considered, but also those of the EU and Asia that are facing considerable challenges as well. There are so many unknowns that sitting back waiting for financial stability will leave people in an even more precarious situation.
While spearheading this movement toward senior housing, some of Barnes’ contemporaries are waiting for the outcome instead of diving in themselves. Regardless of the lack of company, Barnes is more than optimistic about the potential.
Michael can be reached at MBarnes@NewlandsGroupLLC.com