Erickson’s Impact on the Senior Living Market

By Scott King

An article published in the 2008 edition of Senior Housing and Care Journal detailed the impact of Erickson Retirement Communities on both mature and emerging senior living markets. With increasing numbers of Erickson communities offering 1500+ apartments in locales where smaller independent retirement communities have predominantly dominated, the authors sought to determine: “1) What is the impact on existing retirement communities when Erickson comes to town; 2) Will Erickson's new community impact occupancy and waiting list levels for existing communities; and 3) How do retirement communities prepare and respond to new competitive pressures?" Seventy-two executive directors and directors of marketing from senior living communities in two mature markets (Philadelphia and Baltimore) and from two emerging markets (Chicago and Kansas City, Missouri) responded to a mailed survey containing questions relating to the above queries.

Occupancies in all four cities fluctuated between 93% and 97% from 2003 to 2007, with no detectable differences reflecting Erickson’s introduction to the local market. Waiting lists showed a similar trend, although the longest waiting lists were in the more mature markets. Interestingly, while Erickson targets middle-income brackets ($25,000 to $50,000/year), responding communities that serve the highest income group ($75,000+) reported more often that their prospects were shopping Erickson properties.

In Philadelphia, where two Erickson Communities had opened in the previous five years, existing retirement communities experienced the largest “Erickson-related” drain on their wait lists, but the actual number of lost depositors was minimal. Most communities did not notice any change in numbers of marketing leads after Erickson's entry, but communities serving $75,000+ annual income populations were more likely to see an increase in leads following Erickson's entry into their markets.

A small group of communities changed their contract plans to offer 100% refundable entrance fees after Erickson's entry to mirror Erickson's policy. A majority reported making physical changes since Erickson's entry, but they did not attribute the changes directly to competition with Erickson.

Based on their findings, the authors conclude that "the Erickson impact appears to be neutral to positive for existing providers," and suggest that by entering these markets with strong marketing efforts, Erickson may actually be expanding the number of adults who would consider moving into retirement communities as a whole.

To obtain this article, contact Scott King at sking@matherlifeways.com.

Source: Brecht, S. B., Brod, K., & Muller, N. D. (2008). The impact of Erickson Communities on existing markets. Seniors Housing & Care Journal, 16, 25-38.

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