Active Adult – Leading the Way Post-COVID

Active Adult – Leading the Way Post-COVID

A somewhat new segment of rental active adult housing is showing signs of leading the way for senior living development post COVID.  Our estimating department is currently budgeting and pricing several active adult projects for multiple clients.  The product targets baby boomers in early retirement, looking to downsize, but who are years away from needing independent living or assisted living services.

Many seniors no longer want the maintenance and overhead of a large house, like the idea of increased socialization, but don’t require assistance with activities of daily living.  Active adult communities tend to command a premium over standard multi-family products, and because the residents are primarily retired, their incomes are somewhat insulated to swings in the job market and economy.  Another plus for developers, residents of active adult communities typically stay for five years or longer.

While the pandemic has impacted occupancy in all senior living sectors, several owners and operators...

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PVC Supply Chain Disruptions in 2021

While many of us in the construction industry have been focused on dealing with the steep rise in lumber costs over the past year, a new threat is upon us: PVC.  In February, Texas-based petrochemical plants were forced to shut down unexpectedly due to a winter storm that caused vast power outages. S&P Global reports that 75% of the 40 million metric tons of ethylene production were taken offline during the height of the deep freeze.  Bloomberg reports that 60% of the U.S. PVC capacity remains offline still.  According to the Wall Street Journal, prices for polyethylene and polypropylene have reached the highest prices in years.  The problem affects far more than the construction industry; reports of supply chain disruptions are coming out from industries like automotive, food and consumer packaging, medical device and supply production, and more.  Honda and Toyota have recently announced they will halt production...

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The Goose and The Golden Egg of Business

This past weekend I was listening to a presentation on a book many of you have heard and read, The 7 Habits of Highly Effective People by Stephen Covey; I was drawn towards a reference to an old fable by Aesop, The Goose & The Golden Egg.

The story goes like this for those who aren't familiar: A poor farmer discovers that his prized goose has begun to lay golden eggs each day. Excitedly, the farmer takes the eggs to the market and begins to get rich. With his newfound success, the farmer starts growing impatient by only receiving one egg a day from his goose and isn't getting rich fast enough. One day after counting his money, he realizes that he could get all the golden eggs at once if he kills the goose and cuts...

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The Big Three in Building Costs

We always advocate for getting a contractor involved early in your project to help with constructability input, provide conceptual budget estimates and other milestone pricing feedback, and control costs as the design develops.  There are also three key areas that your development team needs to make decisions that significantly impact project costs. 

One of the big three is structure type.  Multiple factors will go into your decision to go with a wood structure, block, plank, block structure with wood floor trusses, steel framing, or a hybrid.  Some of these factors are building code for your particular project, your project's location, which will affect wind load requirements, maintenance of the building in the future, long or short-term hold strategy, etc. 

The second of the big three is the mechanical system you choose.  There are many factors to consider, such as cost, future maintenance costs, what your target client may prefer, the system's life...

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Virtual Inspections

COVID-19 has brought forth many challenges in the last year, and it has pushed our slowly evolving industry into adopting many new ways of conducting business, one of which being virtual inspections from our local inspecting authorities. Many of the counties that we work with have put in place some stringent requirements as it relates to social distancing and minimizing exposure to their staff on the job site. With the advancements in technology, many counties have moved to conducting virtual inspections through Facetime or a similar video call in an effort to keep the workflow moving while accommodating their new standards for employee safety. We have found that our inspections have been rather unimpeded going through this new process while it has required some additional record keeping from ourselves and our subcontractors, it has provided some efficiencies for our inspector’s where they are able...

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Generational Differences

Eleven of us (with me being by far the oldest) are taking Darren Hardy’s new leadership course, which will take all year.  The first session talked about the differences between generations.  None of it was disparaging.  We were all raised with different circumstances, so we are different.   I remember coming into the industry over 40 years ago (!!!) and hearing the older men talking about how the younger generation had changed and wasn’t worth much.  And I have heard similar things from my peers about the next generation.

But as I look at our company, I can reflect on how we have changed generationally.  My peers in the company are mostly gone for various reasons.  Burnout, death, or just losing the will to fight for our clients every day.  And the next generation has mostly taken over, with amazing results.  We had our second-best year last year.  And I’m...

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Expect Material Price Increases to Continue in Early 2021

Last week we authored a blog post looking back on pricing in 2020 and why the reduced pricing many of us were anticipating to come just never did. The question lingering for everyone in the industry now is:  What's going to happen in 2021 for pricing? Many developments were put on hold last year in hopes of better pricing this year, but will that happen? To forecast this, we're looking at the state of 3 current events: The COVID-19 Vaccine, Material Supply and Demand, and Government Intervention.

COVID-19 Vaccine

While we cannot be a source of information on the status and timing of individuals being vaccinated, we know that at some point this year, all those who want to receive immunity from the vaccine will have that opportunity. Market information sources like NIC and Senior Care Investor all agree the outlook for senior housing is positive, and the decreases in censuses...

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What Happened to the COVID Discount?

“Earlier this year, our President, Peter Douglas, posted a Blog pondering the question of how much construction prices would go down as a result of the impacts of COVID on our industry.  At the time of the Blog (May 27, 2020), we were beginning to witness the relaxation of construction material prices, particularly lumber and subcontractors cutting their prices to book work for the unknown times that lie ahead.  It was thought that this trend would continue during the pandemic and that overall construction prices could retreat 3-5%, a welcomed projection for many developers.  Unfortunately, prices have not gone down the 3-5% as originally speculated.  So what happened?

In the months following the posting of that blog, prices for construction materials and manufactured commercial building products increased due to the impact COVID had on production and transportation, compounded by demand, which remained relatively high throughout the pandemic.  An unexpected rise in...

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Common Sense Adapting to COVID-19

There is no question that every segment of the senior living industry, including skilled nursing, short-term rehab, assisted living, memory care, independent living, and active adult communities, have all been impacted by the current pandemic.  Safety and infection prevention are at the forefront of design decisions for new communities that are currently being planned and adapting existing communities to limit the spread of contagious diseases.

The Douglas Company has been working hard to identify common-sense solutions to help control the spread of diseases without significantly impacting costs.  

  • Utilizing antimicrobial finishes on high touch surfaces
  • Reducing the amount of seams, where germs can spread, with sheet goods for flooring
  • Touch-free fixtures and motion-activated sensors
  • Automated doors
  • Infrared fever screening systems
  • Selecting materials that can withstand rigorous cleaning protocols
  • Bipolar ionization and or higher HVAC filtration

COVID-19 is transforming senior living design and construction.  Future designs will seek safe solutions and create ways for providers to incorporate and support new technologies...

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Getting the Right Team in Place

Due to the ongoing impacts of COVID-19, some new projects struggle to secure the necessary capital stack to move forward.  This has been more of an issue in the senior living segment than the multi-family segment; the multi-family space has remained resilient during this challenging year in regards to financial backing for new construction.  In speaking with our friends in the debt and equity circles, the money to fund new ground-up senior living projects is getting much more selective, but I am still being told “the good deals/projects find a way to get done,” that is positive to hear.

In this environment, now more than ever, developers need to have the best teams possible in place to support a successful project.  This of course, includes their general contractor, architect, and operator.  Debt and equity sources need to feel confident that the project has the best possible chance of success. The whole...

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Material Procurement Challenges

As we continue to navigate through the daily challenges surrounding us with the COVID-19 virus, it is important to understand the impacts it is having on our industry. Most notably there has been volatility with pricing, most well-known with the lumber markets, labor shortages, and extended material procurement. The material procurement issue much like the labor shortages is not a new issue upon us in the construction industry, but lead times have certainly changed from previously known and reliable durations during this pandemic. Some examples of extended material procurement issues that we are experiencing across our projects include:

  • Lumber
  • Siding
  • Windows
  • Doors
  • Shingles
  • PVC pipe and pre-molded showers

This is something that will most likely continue until a vaccination is developed, as manufacturers work through social distancing, sanitizing efforts, and infected personnel which all have an impact on productivity and their ability to fill orders timely. It’s important to stay in close contact with Subcontractors and Suppliers...

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What’s Actually Going On with Construction Prices?

It is the question everyone is asking in the construction industry right now, “What’s happening with prices, and when will it come back down?” The short answer is, no one can say for certain.

What we do know are a few key principles that can help all of us be more discerning consumers of current information:

  1. Commodity Prices do not Equal Actual Costs - Many people have taken to following publicly-traded commodity indexes to understand where things are going. While this can give us some insight; many things affect the commodity indexes besides just the actual cost of the materials. For material markets that have been hit extremely hard, turning to trusted suppliers is the only way to know where prices are and what is to come. 
  2. Supply Trumps Demand - In certain markets, such as lumber and PVC, an extreme shortage in supply is driving the price and...

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Fighting COVID-19 with Bi-Polar Ionization

As we continue to learn, adapt, and move forward during a global pandemic, we understand that poorly ventilated buildings are a significant risk factor in the transmission of COVID-19.  Operators and developers who are planning new senior living communities will want to consider air cleaning technology as an option for creating and maintaining cleaner indoor environments that reduce the spread of disease.

Bipolar ionization systems have been tested and found to reduce the levels of various types of airborne contaminants with a MERV equivalent of 13 without the pressure increase of MERV 13 mechanical filters.  During the cleaning process, ions attach to airborne particles like dust, dander, and pollen, subsequently increasing their mass and size. This allows the air filtration system to easily capture the larger particles, increasing the capture efficiency of the HVAC system.

In addition to health benefits, this technology can save building owners 30% on conditioning costs because it...

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What’s the New Standard in Senior Living Communities?

It’s hard to believe that it was in May that I blogged about being ready to “turn the corner” on everything that was impacting the country.  I guess I was a little impatient.  In the meantime, it is as we predicted that there would be some creative times ahead in the design and construction of senior living communities. 

We have spoken with a lot of our colleagues in the senior living operations and design community in the last couple of months to learn about what they want to implement into their future projects to increase health and safety when a contagious health crisis such as Covid-19 hits.  At the top of the list is upgraded HVAC systems to better filter airborne pathogens as well as increase fresh air circulation.  A close second is UV technology to kill microbial particles (both incorporated into HVAC systems as well as other equipment options for...

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The Growing Cost of Lumber

Perhaps one of the largest issues builders and developers are currently dealing with is the recent surge in lumber prices coupled with the scarcity of lumber materials.  According to Nasdaq’s lumber report, lumber has increased 87% since the beginning of the year, which is a staggering increase.  However, what is more, shocking is that lumber had only risen 1.6% from January 1, 2020, to July 1, 2020, but then jumped 85.4% from July 1 to August 20!  The cause is a result of diminished supplies coming out of the mills due to Covid-19 related shutdowns. At the same time, demand has remained high due to strong residential housing and multi-family construction markets. 

The magnitude of this pricing increase is putting pressures on margins for contractors, builders, and developers and could cause projects to be deferred or canceled should these increases continue into the 4th Quarter.  The question on everyone’s mind...

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Quality

Quality control in today’s construction environment continues to be a daily challenge in our industry. Several factors that are contributing to this are lack of skilled labor, lack of subcontractor supervision, and incomplete construction documents. Quality is essential in the success of a project; when managed properly, it results in timely completion of our projects, reduced punch lists, lack of rework, all of which leads to satisfied clients. Over the years, The Douglas Company has put in place several processes and standards to help minimize rework and provide our clients with a quality end product. These processes include:

  • Conduct pre-construction meetings with subs to review the plans and installation instructions and sort out any discrepancies before work being put in place.
  • Mockups which allow for a clear expectation of what the end product is to be amongst the project team (Owner, Architect, and Contractor).
  • Quality inspections are filled out by our project teams...

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Designing Senior Living Communities for COVID-19

Recently I had the privilege of participating in a design charrette for a new IL/AL/MC facility.  Obviously the current pandemic is on everyone’s mind.  No one knows when it will end, if the virus will morph and/or come back, or if we will someday need to deal with another similar crisis.  So the decision was made by the client that the facility needed to be designed not only to protect the residents and staff but also in such a progressive manner that the operator could use this as a strategic advantage in the marketplace.  Their concept is that they want to be known as a place safer than home-where professionals know how to keep you safe. In my experience, these discussions are just starting, so there is much to learn and will continue to be, but some of the ideas that came out were as follows:

  • Electrostatic sanitation systems.
  • Safe visitation areas.
  • A...

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Communication of Construction Delays

A recent report I came across revealed some stunning data about construction delays. According to the 2020 National Construction Payment Report (https://www.levelset.com/blog/2020-reportconstruction- wasted-time-slow-payment), “80% of construction businesses expect delays on some or all of their projects.” That is four out of five construction projects across the board that will have a delay and lose time! While it is no secret that delays are an unfortunate and often frequent problem in construction, numbers this high tells me that some conversations should be occurring on nearly all construction projects across the board that may not be happening.

Developers - Are you receiving notice letters and having open conversations about delays with your construction team? No one likes sending or receiving letters, but contracts often require them, and they don’t need to be contentious. The Douglas Company, one of our 68 documented process systems, requires that we send letters for all delay events,...

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Post Covid-19 Senior Living Communities

The Covid-19 pandemic has impacted nearly everyone and somehow touched every aspect of the world in which we live.  It will change many aspects of the senior housing industry, including not only the prospects for new development but the design and functionality of new senior living communities.  While the ramifications both short and long term are still unclear, the pandemic will not change the vast wave of baby boomers who will provide steady demand growth for senior housing for several years beginning in 2022.

Most experts within the senior living industry continue to express optimism about the long term prospects for senior housing, and particularly the assisted living, memory care, independent living and active adult segments, all of which have experienced significantly fewer cases of Covid-19 than have been realized in skilled nursing communities.

As we begin to look to the future, it seems inevitable that Covid-19 will have a lasting impact...

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COVID Construction

As our country begins to transition back to a new level of normalcy, it brings to light how fortunate we were to be able to continue to work relatively unscathed throughout the COVID-19 pandemic, allowing us to fulfill our core purpose to contribute to the success of our clients and associates. While there is a lot of uncertainty about what all of the long term impacts this crisis will bring, I believe that it is fair to assume there will be some changes to our industry moving forward as a result of the past few months.

The virus has brought to focus on the importance of worker health and safety on our job sites, while some of the policies are tedious, it is better to be safe than sorry. It will be important to continue practicing these policies moving forward into the future to help mitigate any future waves of...

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