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As the challenges of new development persist, senior living operators are adjusting their growth strategies by focusing on internal repositionings, renovations, and infrastructure investments to meet the demands of incoming residents. Capital expenditures (CapEx) have become a vital budget line item for operators looking to stay competitive in their markets.
With new developments becoming increasingly difficult and costly in 2024, CapEx offers a more cost-effective way for operators to drive growth and enhance their properties. Vi President and CEO Gary Smith emphasized the importance of meeting residents’ expectations for high-end amenities and services to ensure the continued success of Vi’s life plan communities.
Other operators, such as Distinctive Living, LifeSpire of Virginia, and Priority Life Care, have also prioritized CapEx projects to reposition their communities for independent living, make infrastructure upgrades, and support their operations. In today’s inflationary environment, where financing is challenging and costly, CapEx spending has emerged as a critical strategy for operators to maintain financial health and improve their portfolios.
Consumer preferences are evolving, especially among the highly sought-after baby boomer demographic. To attract this cohort, operators are focusing on providing amenities like full kitchens, in-unit laundry rooms, natural light, and additional storage. Vi Living, for example, has made significant CapEx investments in projects like the redevelopment of Vi at Bentley Village in Naples, Florida, to meet the changing expectations of older adults.
LifeSpire of Virginia is another example of an operator that has successfully repositioned its communities to align with consumer demands for lifestyle-focused amenities. By listening to resident feedback and suggestions, LifeSpire has been able to drive occupancy and satisfaction levels while investing in CapEx projects to enhance its properties.
REITs have also played a crucial role in driving CapEx spending for some operators, providing access to funding and resources to support renovation and improvement projects. Priority Life Care and Distinctive Living, among others, have utilized their partnerships with REITs to execute value-driven CapEx plans that enhance resident experience and operational efficiency.
As the industry faces continued challenges and changing consumer expectations, strategic CapEx investments will be essential for operators to remain competitive and drive growth in the senior living market. By focusing on identifying the right projects, leveraging partnerships with REITs, and prioritizing value-driven investments, operators can position themselves for success in the evolving landscape of senior living.
