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184: Adam Benton

Adam Benton, Co-founder of Stellar Senior Living, discusses demographic trends in senior living. The Utah-based family-owned senior living operator shares how congregate socialization plays a role in senior’s days as well as what we can expect from looking at birth rates by generation. 

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Lucas:

Welcome to Bridge The Gap podcast, the senior living podcast with Josh and Lucas. Another great episode on for this week, we’re going to be talking about a very important topic of demographics in senior housing and senior living. We want to welcome Adam Benton. He’s a co-founder of Stellar Senior Living out of Utah. Welcome to the show. 

Adam:

Hey, thanks for having me. 

Lucas:

I’ve been watching your content and your post on LinkedIn for a while. Our paths haven’t really crossed and what a great opportunity through the Bridge The Gap network to be able to get to meet you and have this really important conversation that people have been having about our industry forever. It seems like this kind of, you know older demographic or this aging wave of people has been being talked about for a long time. It’s like, it’s coming, it’s coming. It’s coming. It’s coming. Is it really now coming? Because like 10, 15 years ago, they said it was coming, but is it really coming now?

Adam:

Oh man, this is a good question. I think the answer is yes. So 10 to 15 years ago people are going, Hey, it’s coming. You know, average age of seniors is 75 and they’re moving into senior housing. And then that average age just kept creeping out and out and out. And now at least in what we’re seeing now, our average age in my company is 86. That’s our average age of a resident. So all of a sudden this thing that was this tsunami, this silver tsunami, is supposed to be coming their way. You keep getting further and further away from shore. So I think it’s coming though. It’s hard to go against the math, but yes, it will come here at some point. 

Lucas:

And so you’ve obviously done some research in this category. Before we go into those specific details, You are the co-founder of Stellar Senior Living at Utah. How long have you been at this?

Adam:

So I’ve been at this about a decade. It’s a family-owned business. So we started it together as me and my brother and my brother-in-law and my dad. And so there’s actually three of us now that have, that have stuck on. And you know, just like anybody, I didn’t really grow up thinking I’d be in a family business. So I’d call this more like a family startup, but we in fact this is so August 3rd, we ended up starting. We actually got our first assets under contract and operating on August 1st, 2011. So nine years operating, 10 years kind of hustling to get this put together. 

Lucas:

And so you’ve had probably a lot of twists and turns in learning and navigating the business. How many communities do you guys currently manage?

Adam:

So we currently manage, by the end of this month, we’ll be at 26 locations and about 2,400 units. And so that spans, that’s independent living, assisted living, memory care ,we have a skilled portfolio as well. And then they’re all in the Western United States. So we’re based out of Salt Lake City, but we have assets in nine different states. So what we say is we need to be able to fly in and out in the same day. So that’s how we’ve kind of picked our demographic location. And then we also we operate, everything we operate at least a hundred units or larger. So we try to operate sort of an average of 130 to 140 unit property size.

Lucas:

Was that something you learned in a finance class, like as long as you could fly in and out the same day? Was that like in a master’s program?

Adam:

No, it was it was so like I’ve got, my partner has six kids, I have five kids. Ot’s like, as much as we want to be able to be in and out in an emergency. And so we have to have handful of direct flights, but also we just want to have like a life outside of senior housing. And so you combine those two and say, Hey, I just can’t be flying to Florida from Salt Lake City. And there’s plenty of stuff here in the west to manage properly. But yeah, no, it was more of like just a decision that we made as partners early on, and we’ve stuck to it. 

Lucas:

It’s actually really smart. So Josh, you’re an operator in the business, been at this awhile too. This whole topic of demographics, what does this spur in your mind when you hear this?

Josh:

Well, I mean, change, right? I mean, so it’s just like you guys were teeing it up and I was just listening about, we’ve kind of been talking about this for a long time and it’s interesting because one of the things I always was speculating on is like, what is it that the next generation of senior housing professionals, as well as the next generation of senior housing workers, are going to expect? What are they going to demand? And to really kind of understand that you have to really do a lot of diligence understanding the demographic wave that’s coming. So, I mean, that’s part of what I geek out on a lot is just trying to listen and read and research and understand, and just have conversations. It’s amazing with the different age groups and in the different parts of the country how different things seem to be. So, Adam, I can’t wait. I know you’ve done a lot of research and studying this as an operator as well. So I can’t wait to kind of hear what your thoughts are on the demographics that we’re dealing with now and into the future.

Adam:

Yeah. I mean, I definitely think there are some things that we can highlight together that are just clear demographic trends and it’s hard to refute some of these things. What I’ve definitely seen and what you brought up is that smart people can then disagree on what they’re going to want and how to best serve that group. And that’s a debate that can go on for a very long time. And I think it sounds like you’ve developed a lot of senior housing properties, I have too, and it seems like usually every week I’m in an architectural meeting and we’re always trying to push the limit on what you can do within senior housing, with all the constraints that you have to deal with. With payroll and then just cost to build, and sort of how far people need to walk and all that kind of stuff.

And then city requirements all that combined, we just we feel like we’re rolling out a pretty good product these days, but you just never know. And if you imagine, like you sit down today and you try to build something, you’re probably, if you stand and look at a piece of dirt, you’re a good three years out before you’re actually having that thing fully operating and then maybe five years out until it stabilized. And that’s just a long time in the future to think like, what’s what does that person going to want? And then that property is going to then stay like that for 25, 30 years. And so a lot can change in that timeframe, but yeah, I’d love to just to talk about stuff that I know to be true, which is around the actual demographic trends and there’s sort of three things that I’ve highlighted that I’m happy to go through.

Adam:

And so just at a high level, one is just baby boomers aging. So that’s sort of number one. And then two is is people living longer, and I could talk about that. And then the third one is just this utilization or sometimes called the penetration rate is just moving up quite a bit. And so, those kinds of combos are things that that I think that everyone can agree on. Which is good. So in any event, I’m happy to go through each one of those, if you’d like to. 

 

Lucas:

Yeah, go ahead. 

 

Josh: 

Of course, and we’ve only got three and a half hours Adam, so an hour on each topic, that’d be good. Our producer probably just fell over, but no, we’re going to try to condense this into 20 minute conversation.

Adam:

Yeah. I mean, yeah, that sounded like everyone’s about to shut off the podcast, but I think the like first one, baby boomers, baby boomers, that’s a big one. I think, you know, everybody thinks, okay, baby boomers aging, that means, you know, the general concept is, Hey, after world war 2, 1945, the war ends, everybody comes home and they start having kids. And so you go, okay, well, if I know that the average age of a person in a senior living property is 86 and people started having kids in 1945. Well, I can just do some easy math and that’s 1945 plus 86. That gets me to like 2031. And so if we’re sitting here in 2021, that’s a little discouraging because that’s still 10 years out. Right. So you’re like, all right, that just seems like a little too far to be planning for this huge rush.

Adam:

And so what Lucas had said earlier is like, is this wave ever going to come? And I think that’s a general concern is that it will come at some point, but it’s always been a little bit delayed. If you look at actual birth rates though, in the United States, the burst actually started picking up a lot sooner than 1945. It just happened that there was a blip during world war II where it stopped and then it picked up again, but you can actually say like 1937, 1938 at the end of the silent generation, that’s when the birth rates in the United States started going from sort of downward to flat trend to actually moving up. And that trend from 1937 goes all the way until right around almost 1960, like late 1950s. So it’s about a 20-year trend.

Adam:

So now if you go, okay, that’s a little bit more encouraging. So if you take like 1937 and add 86 years, well, now you’re talking 2023, 2024. And that means you have to start kind of working today to create something for that. And that trend is real and it’s pretty big and each year you just have more and more people turning a certain age, so that’s going to happen. Now what they’re going to want to your point, Josh, that’s anybody’s guess.

Josh:

Oh Yeah, I totally agree. And you know, our listeners Lucas, as you know are very broad and diverse and some it’s hard to put there, it’s not just assisted living. It’s not just memory care, you get into independent living. And then it’s like, whose definition of independent living? Are we talking congregate? Are we talking cottages? Are we talking villas? And then now I’m even seeing some of the developers that had been traditionally just doing assisted living. They’ve migrated now they’re doing independent living and they’re doing what I would kind of consider more active adult. And so for some of our listeners, you’re listening to Adam talk about these demographics and for some of you, your senior living is already there. I mean, like, you’re starting to feel that tsunami as we say, starting to come in. So, Adam, I think that’s a really good way to frame this because we could have a beer, have coffee and talk about what are people gonna want. And I think it’s going to be a lot of different things, but look at the sheer demographics. Do you find that encouraging or daunting when you start thinking about the tsunami?

Adam:

Oh yeah. I mean, it’s encouraging for a lot of levels and obviously I’m talking about a huge trend across the United States. As you know every city’s a little bit different and there’s going to be places where it’s booming bigger versus less. Now the thing that’s interesting is this is not difficult math for anybody to do, right? So there’s also a lot of very smart people out there that are out how to meet that demand. And so you’ll see a good supply-demand balance. I think that’ll come in. And one thing that I like, I just go into your point on like, what they’re going to want. I had it explained to me once where you got like, you have your home, you know, hospital, then you have everything in between. You have all these different options all the way from just yet active adult age, restricted ride, all the way up to independent, assisted, memory care.

Adam:

It sort of moves along this way. And then people are getting really good at slicing it and getting further and further detailed in how they slice that. But then you can also think about it more like this direction, so you have independent living great, but now you can say, Hey, I have independent living for people who are interested in art or people that just want to finish another college degreem or the LBGTQ community. And so those are the types of things where I think you’ll see some more stratification, not just like linearly from your home to a hospital, but also vertically from the types of offerings within that slice that people can get. And that’s actually super exciting for me. And you’ll probably see that more in like larger populated cities, but it’s happening and it’s happening today. 

Josh:

Oh, totally agree. I’ve talked about that some with you Lucas, and that is actually one of the things that excites me the most is that it there’s going to be something, I hope our industry pros just really realize that the cookie-cutter box of senior living, that I kind of grew up in the industry early on where every community you kind of went, it was kind of the same. It was kind of the same size. It was kind of the same standard amenity package. It was just kinda different finish colors and textures, but now it’s really exciting and it’s actually kind of hard to keep up with all the different emerging models. And I’m wondering too, and I don’t want to chase a rabbit here, but I’m just wondering, I think our industry has already struggled with helping the public understand what senior living is. And I’m wondering, as I don’t think we ever really did that well communicated who we are, what we do very well now with so many different changes. You wonder that definition has probably gotten even looser. Maybe. I don’t know,

Adam:

I’d agree with that. I mean, I think it’s, people in their lifetime don’t make a decision very often to move themselves or a loved one into a senior housing property. And so it’s a huge emotional decision with a huge cost to it. And it doesn’t happen very often. So that kind of combination makes it a difficult decision in general. And then you add on like those levels of variances between properties and that’s going to be the learning curves high to make that happen. But I do think that there are some positive things. I think the second point that I wanted to make on demographics was that, and I’ll jump back to the third one, which is just utilization. So we are generally seeing that the utilization of senior housing is going up as a percentage of people above a certain age.

Adam:

And so that’s in my mind, the math that we always use in our company is you got about a million beds in the United States and people above 85, there’s probably a seven and a half million people. And so you’re around 13 to 14% of people that above 85 use assisted living. That’s like the really broad, broad terms, but in certain places where it’s been around longer, like Seattle or Portland, that number is pushing like 20%. If you come to places like Utah, you’re like eight to 9%. And so those change, but one thing that I have noticed is that it is getting more people know about it more, especially if you’re like the child of somebody who’s going into senior housing. And you’re going to dinner with your friends and your sort of fifties and sixties years old taught this, this topic always comes up now that someone in that group is saying, well, I’m helping my mom try to move into senior housing. And it’s a real topic that people are learning about. So I do think that the education is getting there and you’re seeing that through that increased utilization, but it’s still not easy and it’s still a little, most people you’re still trying to fight against. What they think of is just kind of like a 1950s nursing home. That’s the normal.

Josh:

Yeah. And we’ve talked about it too. I’m encouraged at the opportunity we have in front of us to do a better job at educating and to help those penetration rates. I mean, gosh, if you look at, I think 7% was what you were quoting, we know not a hundred percent or probably ever even 25 or 40 50% of that demographic is going to choose senior living as maybe we loosely define it. But man, what an opportunity we have with that growing population to develop new programs, services, and senior housing options. So I’m really excited about it.

Adam:

Right. Right. I mean, if you can imagine even just, I always think of it as like I guess pre COVID you used to say, Hey, cruise ship on land. We don’t really use that term anymore. Right. Cruise ship. But I do like the analogy, you know, if you rolled out, if you had a whole fleet of cruise ships and you rolled out something from 1995 today, no one would want to take that. The stuff that people are coming out with today, it still looks like a cruise ship, but there are just so many cool things that you can do on it and experiences and activities. And I think that’s the analogy that I like to see where you’re seeing that level of like innovation and pushing the envelope in terms of senior housing. What I think is a popular concept that I would totally disagree with is that there’s going to be some level of technology, kind of like an Uberization of senior housing.

Adam:

That’s just going to eat up anything that exists today and that it’s going to look completely different. And that people who are out there building assisted living or senior housing locations are going to be sort of caught flat-footed. It’s tempting to go in and go, all right, somebody is going to come in and just kind of create this thing that includes you know, like a Uber and maybe some door dash, and then you have some senior housing or senior center activities. And then you have nurses coming in to help and meals on wheels or whatever. You sort of combine that together to some virtual assisted living option where you can still stay at home and look, this technologies exist today, but I just don’t see it. I’m not smart enough to see how that’s going to happen.

Adam:

And the main issue that I have with it is is that you’re missing something that people always underrate, which is the value of just socialization in a congregate living setting. Where you can go to a meal and see all your friends and have this good conversation, then go and play cards with them. And then later on maybe watch a movie. Or go on and do an activity. And then that’s constant. And I don’t see how that part of a senior housing could get displaced by living at home and using technology. I dont know. That’s a little bit of a tangent, but I do think that that’s one of the main arguments against continuing to roll out new, bigger and better senior housings. 

Josh:

I tend to agree with you, Adam. I appreciate you chasing that tangent because I think Lucas, it might’ve been one of our good friends, Bob Kramer, that I don’t remember how he quoted it exactly. But the essence of his comment on our podcast was something like senior living’s kind of that perfect balance of where high tech meets high touch. And what I took from that comment was in our discussion was, you know, senior living is more than, as you said, Adam, the awesome technology tools that are being innovated to help us do our jobs more efficiently, but the real secret ingredient is the relationships. It’s the human component. And I think we’ve even witnessed that through this last year and a half through the big C-word that I won’t mention on our show anymore, but that big C-word, I think what it told us, and it showed us even in society, just even outside of senior living, is that we’ve got so much technology.

JOsh:

We could basically sit in our pajamas in our living room with a mobile device and our internet and get pretty much anything we want delivered to our front door and never have to have human contact. But is that the life we want? And I think the resounding answer is no! Because I can’t tell you how many people, that even myself, I’m not even the most social person in the world, but after you know, sitting around in my PJ’s for a while, I’m ready to see some people I’m ready to hug some people. And I think that human inter interaction and that socialization like you were touching on Adam, that’s something, that’s one of our secret sauces that’s never gonna go away. I don’t believe.

Adam:

Yeah. I’d agree with that. Look, everybody’s looking for what I’d call an authentic community to be a part of. And you see a lot of technologies that try to recreate that online. And there’s a lot of activity and energy that goes around creating these communities. But look, there’s nothing that replaces like an in-person meeting, especially for seniors. And I saw that through the pandemic as well. That it was during lockdown, it was very difficult for our residents. And that’s, that’s pretty important. I mean, even one analogy that we always use is that like my grandmother lived at home right. For a long time, longer than she should have. And so my aunt was incredibly good at visiting her. She’d go two hours a day, every day, go visit her, but that’s still, it means that there was 22 hours a day where she was by herself, just kinda making it work and then occasionally seeing people.

Adam:

But for the most part, she was alone. And she ended up getting in a car accident that ended up putting her in one of our properties. And I remember visiting her and she just said, Hey, I should have done this a long time ago. And ook, this is her grandson that owns and operates senior housing properties, and she’s still resisting not going in. And then some life event forced her to, and she realized that this is where all our friends were. These are people that she’d grown up with in the neighborhood. This was a good lifestyle that she’d been missing out on. And I think that’s incredibly difficult to replicate just using technology and living at home. Right. I mean, that’s just like, we can all agree on that. Totally agree.

Lucas:

Totally agree. This is a great conversation. And I think it’s something that I would love to continue with you, Adam. There’s other ideas that came to mind that I think would be incredible topics for future shows as far as, even just on the development side. Repositioning I noticed you were talking about that you guys just took over an old bank retail Plaza and you’ve repositioned it to be your office space. And I wonder what the future holds for senior housing as it compared to retail going dark, all this technology coming in and kind of changing the way that commercial real estate works and the senior housing play in that, the middle market, all those things we would love to have you back on and get your ideas.

Adam:

Yeah. I mean, I have a whole thought around affordable senior housing. I think everyone’s really trying to solve that, crack that nut. And my personal view is that affordable senior housing is going to get created by existing older supply that gets kind of repurposed and updated. And that’s just what you see happen in the apartment world. So I’d be similar, right. I’d love to jump on and talk about that. We’ve had, I think as many of them that you’ve dealt with every about seven to 10 years, you have to do something to reinvigorate a property through repurposing a wing or adding a section or adding more CapEx and all of those things when you, when you get a chance to do that, you also get a shot at kind of repainting what your, what your property looks like. So, yeah, that would be great. I’d love to do that.

Josh:

I tell you what. Adam and Lucas, two peas in a pod, such teases to our listeners, y’all just kind of throw that out there and then you’re not going to go there. That’s such a cliffhanger. 

 

Lucas:

So to our listeners this, I think this demographic topic has been really informative and educational. And so if you want to hear from Adam again, and you want to hear these next round of topics, let us hear from you. Comment in our section. And for those of you that want to connect with Adam and his company there, we’ll put all the information in our show notes, and you can go to BTGvoice.com to get the transcripts, download the audio, and also watch the video on YouTube. Connect to us on social media, Adam, thanks for your time today.

Adam:

You bet. Thanks, Josh. Thanks, Lucas. Thank you for your time.

Lucas:

Awesome. Thanks to all of our listeners for listening to another great episode of Bridge The Gap.

Outro:

Thanks for listening to Bridge The Gap podcast with host Josh crisp and Lucas McCurdy. If you were informed, educated, or influenced by this episode, we want to know. Leave a comment on social media or contact us in the show notes. Powered by supporting partners, Propel Insurance, Enquire, LTC REIT, The Bridge Group Construction, and Solinity. Learn more @btgvoice.com.

 

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184: Adam Benton