LLoyd Jones | The Design Charrette: Senior Housing Unfiltered Podcast Episode 3

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The Design Charrette: Senior Housing Unfiltered Podcast Episode 3

The Design Charrette: Senior Housing Unfiltered Podcast Episode 3

Description- New senior housing supply has resulted in increased competition, suppressed occupancy, lower lease-up velocity, and increased concessions. Now is the time to analyze the changing financial and psychographic demographics of your future new residents. Senior Housing Unfiltered analyzes these trends with Melissa Banko of Banko Designs as we discuss market-appropriate unit sizes, configurations, new amenity trends, the appropriate rent levels necessary for successful lease-up and tenant retention. We invite you to listen and become a catalyst for change.

Tod Petty:
Hi, this is Tod Petty with Senior Housing Unfiltered. Welcome to the program today, which is Episode Three: The Design Charrette, envisioning new senior living. Today, there’s three goals that we want to achieve as we discuss with Melissa Banko. One, hesitation will never get you the answer you want. Number two, action will give you more discoveries than hesitation, and start moving, action will come to you. You’ve got to get moving. Ladies and gentlemen and friends from around senior housing globe, we’re so grateful to Melissa Banko. She’s taking the time to pour into us her visionary design for the new housing product ready to be discovered. It’s my privilege, Melissa, to introduce to you our mentor and friend Melissa Banko, with Banko Design.

Melissa Banko:
Hello, hello, thank you, Tod, and members of our beloved Senior Housing Unfiltered podcast, I am honored that you would set time apart to hang out with me on this program and be with me to learn a little bit more about what Banko is doing as we work together to better this industry and prepare for changes coming to senior housing in 2020.

Tod Petty:
Thank you, Melissa. Melissa and I are broadcasting from The Future Site at Banko Design, somewhere in Atlanta.

Melissa Banko:
Somewhere.

Tod Petty:
So, we were blindfolded and escorted to the undisclosed location, because apparently, it’s secret knowledge, which will soon be revealed by Melissa at the appropriate time. She said I cannot do it yet.

Melissa Banko:
Yes. We’ve leaked a little bit, but we’re super excited about a new space for the studio and the warehouse of Banko Design, not too far from where we are now, but we’ve been really blessed this year to continue to grow, and that meant outgrowing our current space.

Tod Petty:
How could you be expanding? You’ve got all this office space you’re going to be moving into. We were met by all your team when we walked in. I mean, it’s busy. It’s like two days before Thanksgiving. What is going on here?

Melissa Banko:
Listen, what sets Banko apart is definitely this team. We have had a busy year despite the craziness of COVID and what the world’s been dealing with in 2020. We’ve stayed really true to our roots here this year and continued to grind down, chase work and just pump out really good work with our really awesome clients, and we’ve seen an influx of clients, we’ve seen an influx of talent. We’ve scooped up talent from other verticals that haven’t been as busy this year, which has been a huge blessing.

Tod Petty:
Great. We’re going to be talking in a moment about becoming a person of action in response to changes that are occurring in our industry. So, we have an incredible vital lesson for all of us. Action is where transformation really happens in your life and my life. So, stay with us. You are our friends and we’ll prepare you for what is going to happen in 2021. Our goal is to bring some value to you in exchange for your time today, and we appreciate you joining us on this podcast. We’re proud of our team members who are making this podcast possible. We have minced ourselves in the fourth quarter at Lloyd Jones with the future of senior housing. One of the most important leadership lessons to understand is we do what we need to do, not what we necessarily want to do.

Tod Petty:
I mean, there’s things I don’t want to do every day, but I know I need to do them. In the midst of an unpredictable pandemic, regardless of how negative it can be at times, we must keep doing what we need to do to prepare for the future, regardless of how we feel, because the future is coming, it’s going to be different and we must prepare for it. So, we’re going to share this lesson with you. I hope we do a good job. We normally do a good job at communicating. We’re going to give it our best shot. Let’s go forward. Our podcast is titled, The Design Charrette: Envisioning New Senior Living with Melissa Banko.

Melissa, you know what that is?

Melissa Banko:
I do. I do. What the audience doesn’t realize is we’re actually going to sing for an entire hour.

Tod Petty:
Yes. That’s-

Melissa Banko:
That’s you, actually. Isn’t that right?

Tod Petty:
I’m a humble man, so I can’t play anymore. We’ll tune into Melissa’s website and you can figure out what that was about.

Melissa Banko:
Yeah. Tune into the telethon next year.

Tod Petty:
The telethon.

Melissa Banko:
And we’ll send a link to our debut as a singing duo, our first.

Tod Petty:
Our first hit record. It’s going to be great.

Melissa Banko:
Yeah.

Tod Petty:
Colonel Joshua Chamberlain has a great code I want to give you. He said, “My future is immediate. I will grasp it with both hands and carry it with running feet.” That is a very important statement. Let me read it again. “The future is immediate, is now, I will grasp it with both hands and I’ll carry it with my running feet. When I’m faced with the choice of doing nothing or doing something, I will always choose to act.” Wow, I love that fact. When I’m really faced with the choice of doing nothing or doing something, we always must do something. The bottom line thesis is this. If you do not have all the answers, move anyway. How many times do we hesitate because we do not have the answers? Action, we have to take action. There’s no traction without action, and action is a part of traction. And Melissa’s going to tell us today how they’ve taken action to prepare for the future. Melissa Banko, welcome.

Melissa, you’ve been preparing for 2021 this entire year. Every time we’ve measured, you are doing something, you’re creating something, you’re getting ready. I’m watching the design, the product change before my eyes, and you’re ready. You’re active. Share with us a little bit about what you’re doing. What are you getting ready for? I want to know, secret knowledge.

Melissa Banko:
I agree with all of what you’re saying and that there’s goodness in action. Even after this year, we had projects going hold. We had projects that needed to be pushed off because they were renovation work. 2020 was a year where we were thrown things that we didn’t anticipate, but we kept moving. We grinded down as a team. We had hard conversations about how to do that. We were strategic. We knew that we wanted to continue to stay in the verticals that we were, and we wanted to continue to stay successful in those verticals, and we put a plan in motion. We took on an amazing studio in Minnesota so that we could expand our services within senior living. That team has been a wonderful asset to us in taking on more skilled nursing so that we have skilled nursing all the way up through luxury product. We’ve expanded staff. We’ve continued to work with clients and push projects along. So, we’ve been busy. We’ve been busy.

Tod Petty:
Excellent. Excellent. We’re going to find out today how you’ve been preparing to meet this new product change, this new shift that’s taken place. What does senior housing look like in 2021? What does new product look like? What’s the product for the middle market? What are we seeing before our eyes? We look forward to speaking with you about that today.

Melissa Banko:
There is a misperception maybe about what an interior designer in general does. Yes, we get to play with all the pretty things, beautiful finishes and specifying lighting, and we get to draw all day and just roll around in paint chips. But the reality is, yes, that is an amazing part of what we do. But our value add is really in the programming and the space planning and the understanding what a building really needs. So, in reacting to what you’re saying about expectations of who we’re designing for, not all buildings are meant to be equal, and you have to have an understanding on the front end about who your target demographic is, and who you are designing those buildings for.

Tod Petty:
You’re saying, Melissa, are you saying that buildings were designed without the end user in mind?

Melissa Banko:
I am saying that there has been a boom in our industry before the baby boom ever got to it. Yes, the baby boom generation is going to ask for different things, but again, we can’t lump that generation. We can’t lump all seniors into the same category. They have different needs.

Tod Petty:
All baby boomers were not created equal.

Melissa Banko:
Created equal. They need different things. The care level within this age bracket that we’re designing for, they need different things, they need different levels of care. We can’t just assume that all of these buildings can have the same things and work for everyone. The other reality is you do have to peel back the financial part of it, and you need to bring in your consultants to peel that back with you so that we are planning and designing an appropriate building, not only based on what your residents need, but where you need to fall in the market. Listen, we have designed a lot of really great buildings that are all over the spectrum as far as, again, level of care where they fall in resident fee, and what the financial play is there. Yes, there is a smaller portion that are asking for this luxury product.

Melissa Banko:
So, we are having lots of conversations in the industry, is how do we serve the rest of that demographic? How do we design really great buildings that make sense from a performer level, but are also giving the care that is absolutely needed in these buildings. There has been this shift to almost out of design each other, who can make it bigger, or who can make it better, or who can make it higher end. We want to be strategic about who we’re working with, because at the core, it needs to be about the care. It needs to be about the service that is within these buildings long after we exit. Again, there’s a value play with a designer who understands the senior living space so that we can help you map out programmatically what the space needs to do so that it can support the staff that is there to take care of the residents.

Tod Petty:
Yeah, that’s a great point, because we’re seeing right now very beautiful communities that are stalled in lease up, and the price point is so high that people are not willing to pay the price for the extra amenities.

Melissa Banko:
Right. We are not saying, by any means, that you can’t have really great design and care in the same model. Banko has built a business on it. We can have good looking buildings that fit and check all the boxes, but also support the care side. There’s a way to do both. You can have really great design at any budget. We can have different rates and different room sizes and different levels of care, and you can still have really lovely, coordinated design as a whole that also support the program. We begged profusely to bring in ops early, bring me the ops team, let me dissect what it is that they need because every ops group is also different. We are a consultant that is brought on to support that. Again, there isn’t this secret formula that a great interior designer in the senior living space just pulls out every single project and just starts going through the manual.

You have to really dive in, you have to listen to what your operations team needs. You have to listen to what their expectations are, who they want to attract, and you are responsible, as a designer, to support that, to design around what that operations team, what that development team really needs. Because again, anybody can come in and slap up tile and hang lights. It’s all of the little things that go behind those specifications that make a building successful, and it’s a lot less about what you’re looking at when you’re looking at Instagram photos, which listen, we love that because we do that really well. But again, there’s a support on the backend, because again, we exit. We turn over a building, and we want to come back a year later, two years later, three years later and hear that we have been able to serve seniors here. It’s been really successful. The buildings have wrapped our residents, and it feels like home.

That’s definitely part of why we design in this space.

Tod Petty:
Maybe we should pivot on that and talk about what is needed to be known about older adults in the variety of groups they are. Anywhere from, we talk about 55+ all the way up to skilled nursing, but 55 to 85, and what their special needs are, because to your point, not only in design, but we see operationally people have entered the space, particularly younger people that are very smart people. Quite frankly, I think this is pretty simple and this is going to be a cake walk. Now they’re dealing with management of older adults and their needs in that, and they fail. They’re failing, and companies built upon even purely 100% service delivery of hospitality services, when they, not emphasizing health care, they’re struggling as well. Let’s maybe talk a little bit about how design plays into that, of the servicing of an older adult.

Melissa Banko:
Yeah. Again, I think it’s the mashup and how you perfectly blend the health care need, the care need to really great design so that our residents do feel comfortable. They don’t feel like they’re in an institution. They don’t feel like this is where they’ve “had to go.” They don’t feel like they’re old. They want to feel vibrant, they want to feel like they still have purpose, they want to feel like where they are living and where they are, somewhere that folks want to come and visit. Again, there’s a way to do that. Can we make sure that meds are given on time and are easily accessible, but also locked up in safe when they need to be? Do I have access to snacks and meals and all of the great F&D things when I want it to, like I would at my home? How do we monitor that?

Do I have someone who is going to love me, lay hands on me and make me feel loved throughout the day? Again, you didn’t hear anything about lighting, or color, palette, or any of that. Now there’s a way that we building can support that. Again, it’s layout, it’s understanding how an operations team staffs a building and what that looks like. Are we taking care of our staff with space planning so they have the spaces that they need to be successful? Then there are of course design driven things. Are we making sure that the lighting that we are designing highlights our design and all of the prettiness, but is it also the correct light level for our seniors? Is it the correct light level for our staff? Sometimes that’s different. Are we taking appropriate finishes so that we can make sure that we are providing slip resistant finishes?

Are we providing materials that can easily be cleanable and wipeable and sanitized, and over time, it’s not going to look like they were cleaned and sanitized and wiped down a million times. Banko Design’s very “resimercially”, and that word comes up a lot with us, and I feel like we should coin it. We feel like we want to make sure that these communities do feel like home. It’s a residence. Residents live here. So, how do we provide the residential allure with the commercial needs? And again, supporting the care component.

Tod Petty:
Tell me what happens in the process, because I’ve noticed, if you can go out to Texas where there’s a very strong life safety component to bring these buildings out of the ground, and you don’t have an option on light levels. I mean, light levels are being measured in every area of the building and it’s a minimum requirement. So, there’s really a lot of adequate lighting in most Texas buildings. Then you can come out through the Georgia side and you go into buildings and you’re wondering where the lights went. Obviously, someone is designing the building to minimum, a minimum standard that doesn’t require all those lights, but in Texas, they are upping their game because they have a higher minimum to achieve.

But both communities come out and both are functioning. What happens in the disconnect there? Is that because architects are trained to meet the minimum standard from a cost savings standpoint? Which requires a design firm such as yours to come in and say, hey, we have to up our lights, even though the minimum is X, because we have seniors that can’t see, we have memory care residents that can’t see three feet in front of them, and they mistakenly see things for what they’re not and can get confused and exacerbate their emotions. Is that something you regularly had input in?

Melissa Banko:
Absolutely.

Tod Petty:
Are you successful when you have that input?

Melissa Banko:
I think so. It’s a team effort. You’ve got a whole team of consultants that are working on these buildings. We love that collaboration with architecture and MEP, and structural and landscape and all the wonderful consultants that it takes to create a holistic community. So, absolutely your interior designer is going to weigh in on what those light levels … what a jurisdiction is telling you that you have to have for code compliancy might be different from what your interior designer and your architect are telling you is right and good for your vertical. Our light levels and our light color temperature does look different in the senior living vertical than it does when we’re designing traditional multifamily or hospitality.

Again, it’s not just about light level, it’s also about color temperature and how that affects our seniors, and the way that they see things that is different from how a 20 something or a 30 something is seeing things. That does play into a lot of the other things we do with color palette and variation in tone and contrast and all of those things. I could talk all day about materials and what that looks like and how we’re weighing in on all of those things, flooring, transitions, and slip resistancy, and anti-microbial materials, and what cabinet heights are the best. All of those things are the little things, again, that one probably doesn’t notice, but you do notice when you’re comfortable. You do notice when it feels right.

Tod Petty:
So, you’re not consciously aware of it, but subconsciously something is registering.

Melissa Banko:
That’s what we hope our users are saying. Maybe I don’t know why it feels, but you know when you’re attracted to something because it’s good looking, because it’s aesthetically pleasing to you.

Tod Petty:
It feels good.

Melissa Banko:
But when the design is right, all those heights are right, and the way you’re interacting with a space, when that feels right, we don’t want you to necessarily notice that it’s designed well. Those are the little again, nuances and the tricks of the trade with the experience that you’ve learned being in a certain market. That’s, again, what we bring to the table.

Tod Petty:
That’s really interesting. I remember my mom, I helped her last year into assisted living after my father passed away. I took her to a resort building thinking that she’d like it. She went in, it was a grand hall, and she went in and had the bistro, and it was very beautiful building. It looked very much like a Ritz-Carlton. I’m thinking of the one at Lake Oconee over in Greensboro. She went in there and she said, “Tod, I don’t want this. I don’t want to spend your inheritance on this.”

Melissa Banko:
Did she know why she didn’t want to be there? It didn’t feel right?

Tod Petty:
Yeah, didn’t feel right. She said, “I don’t like this. I don’t want to spend the money.” I said, “Mom, it’s the same amount of money as the one we saw earlier.” I’ll talk about that in a minute. She said, “I don’t feel good with this. I’m not comfortable with this.”

Melissa Banko:
But doesn’t that prove the point that not all buildings are going to check all the boxes for every single resident?

Tod Petty:
Absolutely. That’s what she-

Melissa Banko:
That’s okay. We have buildings that are going to feel right to some and not to others, but the ethos behind what we’re doing has to be right and good.

Tod Petty:
Right. She said, this is a young person community. It wasn’t assisted living. So, she chose a smaller community, small footprint, very home-like. She said, that’s where I coined the term, she said, “Tod, this feels like it wraps its arms around me and makes me feel very comfortable.” Paying the same amount of money in a different place without the grandiose. I see a lot of people share that. That’s registering with either that demographic group from a different time, or it’s resonating with someone that’s older, that it’s no longer a priority.

Melissa Banko:
Okay. But take the age out of it. Scale is a big part of what a designer does and plans out. Regardless of whether you’re 30 or you’re 80, scale still applies. Just because you’ve got 30 foot ceilings doesn’t mean it’s right and good. Just because the grand hall is bigger than the one down the street… it does not make it right and good. You do want, again, regardless of age scale. It needs to be planned appropriately. Again, that’s one of those things that maybe folks don’t think, oh, a designer is breaking that down. Yes, we’re absolutely doing that. We’re dressing a building appropriately and we’re also breaking downscale so that it does feel comfortable when you’re in it, and that was pre-COVID. Everything could be open. Again, depending on your residence and depending on what you want to bring to market, that’s also going to play into what at a developer or an ops team or ownership team tells us that their wish list is of what they want to bring to the market and who they see their target and demographic being.

Tod Petty:
That brings up another question I just thought about. Do you have conversations about the staffing of a building?

Melissa Banko:
Yes.

Tod Petty:
Because one of the things that, again, that we’re seeing as occupancy is suppressed. We’ve lost 20%, pretty much in an AL memory care over the last six months through attrition with the inability to move anybody in. So, revenues drop, lease up was stalled. We’re 10% below occupancy stabilization.

Melissa Banko:
CapEx couldn’t be spent, renovations couldn’t be done.

Tod Petty:
Right. The greatest need was staffing, to take care of the residents, but because of the cost associated with the building, the demand from investors, not, I don’t know all of them, but generally speaking, was to cut costs, and the single most costly line item is labor. That’s where the cost was cut in order to support a building that was highly, I don’t even want to use the word amenitized, but it was highly designed for a wow factor.

Melissa Banko:
Well, and to be full.

Tod Petty:
And to be full, but if the staffing doesn’t support the levels of care that the resident needs, you’re not going to keep people in the building. Actually, we’re seeing that people come in, they walk by the building, they love the building, they stay. The care doesn’t match the building. The care is lacking. There’s not enough staff take care of the residents. They exit, they move out, and they go down the road. Having experienced that and say, it was great place. I was attracted to it. It was great, but I didn’t receive the care that I needed.

Melissa Banko:
Sure. I get that. Speaking to staff with any business infrastructure, time is money, right? It’s the same here at being a service driven company. Time is money, and you want to talk about efficiency and you want to make sure that what you’re planning makes sense from a staffing perspective. That’s what I’m talking about when I’m talking about programming and space planning. So, here’s where we serve meals. Okay, let’s talk about what that travel path is and how we’re getting food to dining room A, and then to dining room B and to dining room and C, and let’s talk about, when we do need to give meds, what does that look like? So, I’ve got care stations, and are they in the right location? Tell me how many staff members we have. Doing that, what does that look like?

Let’s talk about reception and then admin suite and where those people need to be, so that they are placed in the building where it makes sense. We’ve got activity directors, and we’ve got all sorts of additional care staff. You’ve got laundry. That’s a whole other, maybe not sexy part of the design process. You’re talking about, what does that look like? Are we taking laundry from rooms? Are we bringing that to master laundry space, or is there a laundry in the rooms? Mail, what does mail look like? Do we have mail being brought to a central location and we have a staff member that’s handing that out? Is there a parcel area? Is there a place … So, you have to talk about those day to day activities, and what’s going to happen inside the building day to day so that we can help you plan to be efficient because then you could get away with, I don’t know how to say that better, with a slimmer staff, so that what they’re doing day to day is efficient.

Tod Petty:
An efficient staff.

Melissa Banko:
Then also, let’s talk about longevity of keeping that staff. So, you have staff in there and they learn the process, and here’s what the day-to-day looks like. Are we taking care of our staff members? Do they have a space where they can go and they can chart, or they can complete their daily activities that maybe aren’t resident facing? Are we giving them the flexibility with office space? Are we giving them the flexibility with that downtime again, with where it’s not a resident facing? Because if we don’t take care of the staff, the staff doesn’t take care of the resident. So, we’re designing buildings, obviously for our residents first and foremost, but we’re also designing buildings for the staff that’s going to be in them.

Tod Petty:
When you’re speaking, Melissa, this is interesting, when you’re speaking with new people to the industry, there are some of these sacred cows that have been around for 20 years, that I think people think are brilliant because it saves money, and people are attracted to saving money. I think of some of these sacred cows, one is, well, we really don’t need a break space for the employees because they need to be working with the residents. So, when they take their break, they can take it with them in the dining room.

Melissa Banko:
Sure, but you know what’s more expensive though? Turnover.

Tod Petty:
Well, not only turnover, but a DOL (Department of Labor) audit the finds that you didn’t give them space that hour that you deducted their pay, and therefore you owe them the money for the last one year, plus all the employees. That’s a regulation that needs to be factored in. Turnover is significant because residents in the building like consistency. When there’s constant turnover, their emotions become exacerbated and stressed.

Melissa Banko:
Right. You and I, we sort of just talking back and forth and sort of talking about this topic today, and really two things came to mind for us, and that was that you and I were of like-mind about things that maybe were working in the industry and things we’d like to see improve in the industry. I get asked all the time, why do you want to be in the senior living space? Why do you enjoy designing in that vertical so much? I’ve said, and we’re starting to see that turn a little bit, but we as a company saw an opportunity again, to provide really great design, but also help operations group and development groups to plan a little bit more on the front end, so that, not only their buildings can be efficient in the long-run, but also the process to get that design is more efficient, over-communicating on the front end about what that design process looks like, talking about budgets upfront, having really candid conversations about who we’re designing for, and really doing some strategic planning on the front end, which we have found makes better buildings in the long-run.

Melissa Banko:
We enjoy it because I think that, in having those conversations, we’re building better buildings, but also, being able to take the pretty side of it and applying it on top of that. Because again, it goes back to that mashup, you can have both. You can have a really well-planned out building that’s taking care of the residents that it needs to take care of, but it can also feel really pretty, and it can feel nice to be in, and there’s a way to do that.

Tod Petty:
Yeah, no doubt. I think, when you have operations involved in the very beginning, even if the operational desires do not prevail, at least everyone at the table understands what we’re giving up. If the code doesn’t include maybe a clean and dirty, or a clean and soiled utility area, and we’re just going to have one area where we’re going to have it mixed, and operations is saying we really need separate spaces for infection control, or for ease of labor. And we said, we just don’t have the room. We’re not going to do it, we’re all going to combine it. Then we all can say, okay, but we all understand, once we’re open the challenges this is going to bring to the operation side. If we all say yes, amen, we all agree the challenge it’s going to make and we all have buy-in, versus making that decision without operations, then you hand the building over to them.

Tod Petty:
Everybody leaves, the GC leaves, the developers are just like checking in once a month, and our operation is trying to deliver what the client is really paying for, which is service and care in the building that will not necessarily promote it, and there’s a lot of stress.

Melissa Banko:
Right, and then you’ve got moving around of spaces or trying to make spaces work that were designed for another purpose, and that doesn’t make sense, and it certainly doesn’t show well. So, it’s trying to mitigate that on the front end.

Tod Petty:
You’ve seen operational groups go crazy, I believe when they start to move spaces around what they think is good.

Melissa Banko:
Oh, makes us go crazy.

Tod Petty:
I really love it too, when they’re just kind of let go and like, hey, we’re going to remodel this room, so you guys go out and find a contractor and put whatever you want in it.

Melissa Banko:
Right. Well, I think that what successful groups have figured out is that there has to be a level of flexibility. If we didn’t learn all that as a whole in 2020, as you have to pivot and you have to be flexible, no one is saying that the new model is to strip out all the amenities. We want those amenities to be there if it makes sense for the demographic that we’re targeting for that certain buildings. No one’s saying, I’m not saying strip them out. I’m saying, be smart about it and hire an interior designer that can walk you through how to do that. We’ve referenced, the bistro has become a joke, I feel like in our space is like, everyone’s got the bistro, everyone’s got the movie theater, everyone’s got the arts and crafts room.

Melissa Banko:
To some degree, you do want to have those spaces programmatically, but can we design spaces that are a little flexible so that you’re not maybe taking on more square footage. You’ve got spaces that are going to turn over. I think that this year specifically has taught us that, that will be essential, and the grandiose spaces that we were designing in ’19 and ’18 probably will be relooked at. Again, why is a resident going to come to a community? They’re going to come to a community because they are getting something from the community that they can not get at home. If we provide a space that feels comfortable, it feels “resimercial”, the arms have been wrapped around, how do we make sure that again, we’re providing things that they need? It’s that care component, it’s the purpose, it’s engagement, it’s socialization, and we can provide all those things through really great amenities, but let’s be strategic about it.

Melissa Banko:
Let’s make sure that as a whole, the project makes sense. I’m not again, not talking just about the care or the design part, but financially. If you have a good interior designer who’s going to have those tough conversations with you about how to spend the money right, let’s have that conversation.

Tod Petty:
Well, if you can reduce your square footage and that results in a drop in the residents’ rent, that’s going to be very important moving forward.

Melissa Banko:
That’s designing to the middle market, which there is a void in the market, is designing for the middle market. So, how do we do that? Again, that’s not like, hey, listen, you’re a middle market. You don’t get the bistro, you don’t get the theater. That’s not what anybody’s saying. We’re saying let’s be smart about how to plan it right so it makes sense for that project type.

Tod Petty:
Right. Well, so I kind of look at what Hyatt Place has done. It may be a good example of where we’re going. Because if you go stay at a Hyatt Place, you walk into the front, then you’re greeted by the concierge, by the desk manager, and you check in. By the way, right next to it, you want a cup of coffee or a glass of wine, and you go sit down and then she moves over there and serves you your glass of wine, and you can have your pizza. Then, oh, well, I needed a ride to the airport. One of the desk parts jumps in the van, they take you to the airport. It’s all centrally located. You have this nice space where people are all around and you’re not having to go down to the right to the restaurant and then further down to the right to the bistro, and further down to the right to the business center. It’s all conserving space, bringing people together and having still a good deliverable.

Melissa Banko:
Right. Banko, as a firm, we are in three verticals. So, senior living, traditional multifamily, and hospitality, and there is some beauty in being in all three of those, because we can take lessons learned from those other project types and integrate them into what we’re doing in senior living. Because again, even across the board with those… good design is good design. Now, you need someone who’s going to really coach you through the senior space, because there are nuances of that. But yes, you’re talking about a hospitality model, and the hospitality model is centralized amenities for efficiency, and what we just talked about, which is staffing. The other great thing about that hospitality model is that I don’t have seniors that are schlepping to lots of other areas of the building.

So, it’s also breaking down how they use that building, what their track is and folding that into how staff is tracking too. I agree with you. There’s flexibility in those spaces. You still have all of those amenities, you still have all of that service. It’s planned out so that there’s some flexibility.

Tod Petty:
It’s almost a dichotomy. You have to create, we’re talking about two different tracks that have to be blended into one building. So, we’re talking about potentially rooms changing to be comfortable for the resident. One bedrooms, maybe washers and dryers come into the room, maybe kitchen that’s come into the room, which we’re seeing kitchenettes going into hotels, extended stays at about $2,500 a room and being repositioned as multifamily. But you bring those in so that you can quarantine if you need to. That’s important. But at the same time, we know from the pandemic, we’re dealing with a lot of depression, we’re dealing with a lot of disconnect, and it should be no surprise, if you read the book Live Long, Die Short, which is a great book, it talks about the number one contribution to death is lack of connection.

Melissa Banko:
Absolutely.

Tod Petty:
Once there’s a lack of connection, there’s a lack of socialization, there’s lack of purpose and relevancy. There’s just nothing to live for. It doesn’t matter how pure your water is, it doesn’t matter how clean the air is. It doesn’t even matter if you’re hydrated and your medicines are being taken. You have no connection, you really lack of purpose. So, we can’t just assume we can minimize the common area spaces, quarantine, and keep people safe and that we’re going to have a good outcome. We have to blend the two together.

Melissa Banko:
Absolutely. We’ve gotten that call from a lot of our owners and operators, is okay, so we need to break down these large rooms, right? It’s like, yes, and there is a way to do that without completely redesigning your building. Let’s look at a safe way to socialize so that we don’t say to our seniors, okay, crazy virus going around and so everyone stay in your room until further notice, because it is. It’s taking a toll on our seniors. I’m not even referencing the virus. How can we make sure that they still are getting the love and care and attention that they need, which again, defaults back to why we’re in healthcare. It’s a healthcare model. We want to make sure that they are taken care of and they have all the things that they need, but we can’t just put them in rooms and assume that they’re going to be fine.

Tod Petty:
Right, and pat ourselves on the back and say-

Melissa Banko:
We kept them safe.

Tod Petty:
What an awesome job we’ve done. Then, if we do a great job, no one has COVID-19.

Melissa Banko:
But doesn’t that go back into the whole planning? Maybe we’re not eating in the dining room all at the same time, it’s staged dining. How is the building going to support that? How’s the staff going to support that. Maybe it’s not movie time all at the same time, maybe we’ve got groups that sign up and you’ve got a couple in there at a safe distance. I think, again, there’s a way to do it, there’s a way to pivot, there’s a way to have those conversations, but we want to make sure that our seniors are still getting to see other seniors. We want them to see their families. We want them to interact with staff. We want our staff to be safe.

Tod Petty:
Well, a reduction in the building footprint with amenities being consolidated, but still given, but the space lesson, that will create less debt service as a cost of sales, and with less debt service, and that was dollars freed up, you can actually add staff to really deliver the care you need to deliver. I think people would be willing to pay the same rents they’re paying, but maybe in a smaller venue with good technology and good amenities, rather than a place that’s very grandiose, that’s costing a lot of money on rent and maybe a reduction in the care delivery because of that.

Melissa Banko:
Right. I get that. We get asked all the time, especially in this last year of sort of, what does that look like if new building’s moving forward in ’21? I don’t think it’s dramatically different from what we were doing. As far as asking the same questions and doing the same research. I don’t want to be over-reactive to 2020.

Tod Petty:
Some of that’s going on.

Melissa Banko:
Some of that is, and that’s dollars too, that we’re going to retrofit buildings and-

Tod Petty:
UV lighting, air handling, removing the air three or four more times an hour than we had in the past.

Melissa Banko:
Listen, no one’s saying not do it, but do it smart, make sure you’ve done all the research and that you’re building is going to support those things. Yeah. What do we see as things in ’21? What do we see that we think is going to work, and what are we going to do about it? How are we going to lead effort in that? Good question?

Tod Petty:
Good question.

Melissa Banko:
I think renovation and repurpose and spending some love and some time on buildings that are already existing is going to be a big trend in ’21. I mean, obviously there was funds that weren’t spent in ’20. There are a lot of developers and operations teams that think they’re designing luxury and they’re not.

Tod Petty:
Right.

Melissa Banko:
That’s a big-

Tod Petty:
Well, they think they’re programming five-star dining and they’re not. They believe it is.

Melissa Banko:
So, there’s a disconnect there.

Tod Petty:
Is a big disconnect. There is a disconnect.

Melissa Banko:
But I will say-

Tod Petty:
This is not Ritz-Carlton. What we call resort is not Ritz-Carlton.

Melissa Banko:
Well, and there is a space for that. The reality is, is it’s just a very tiny portion. Again, as business people, we see that there’s still a void. I want to help be the design group that can say, yes, listen, we have luxury product on the market right now, and she’s stunning, but there are ways to also have really good looking mid-market products. There is. There’s a way to do that, and there’s a way to make the numbers work. Because we hear that a lot. Oh, that we can’t make the numbers work. It’s either got to be grit and you’ve got no money for finishes at all, or it’s got to be here. There’s a way to do here. Let me do here. Let me do the middle. Regardless of where you are, luxury to here, I think the biggest trend that you’re going to see in ’21 is just health and wellness overall.

Melissa Banko:
I think that you’re going to see a focus on fitness, I think you’re going to see a focus on PT and OT, I think you’re going to see a focus on spending more dollars for cleaner food, I think you’re going to see a focus on that F&D component altogether, I think you’re going to see a focus on mental health, because we’re all going to need to rebound from 2020. Regardless of whether you have luxury and you have a five star fitness center and spa, or you have a middle market product, or below, there still has to be a focus on wellness. I think that, that’s what we’re going to get a lot of requests for, and if we don’t, we will be pushing that agenda. You can talk to doctors all over this country that can talk about COVID all day long, but all of them will tell you that some of your best defense, whether you are 30 or you are 80, is being healthy and having a strong immune system and be mentally well enough to potentially fight something off.

Tod Petty:
Right. It’s really-

Melissa Banko:
Or, a pre-existing condition. I’m not a doctor. I’m not going to get into that.

Tod Petty:
Yeah. It’s not rocket science, right?

Melissa Banko:
Just take care of yourself.

Tod Petty:
I mean, Harvard Medical Review, it’s hydration, it’s nutrition, it’s movement. It’s positive psychology.

Melissa Banko:
And it’s engagement with other humans.

Tod Petty:
Right, socialization.

Melissa Banko:
So, how do we create the space that’s going to support staff to be able to give that to residents?

Tod Petty:
To your point, that’s going to be needed in every one of the models we just talked about.

Melissa Banko:
Every single one.

Tod Petty:
Skilled nursing.

Melissa Banko:
Every single one.

Tod Petty:
Assisted living memory care, independent living, 55 active adult.

Melissa Banko:
Health and wellness is the new way.

Tod Petty:
Right. Actually, that’s confirmed early in the year before the pandemic, it began to bubble up at National Investment Center, it began to bubble up at the American Senior Housing Association.

Melissa Banko:
There’s a spotlight.

Tod Petty:
It is. It is about, if you’re not ready to run a wellness and health care community, then you’re in the wrong space. If you think this is all about hospitality, you’re going to be in trouble because the future is healthcare.

Melissa Banko:
You’re right.

Tod Petty:
With that, Jimmy, I think we’re going to have to leave. I’ve been drinking from a fire hose with Melissa Banko.

Melissa Banko:
Because we don’t talk well. I don’t know how we-

Tod Petty:
We just run on and on. Thank you, Melissa, this was great today.

Melissa Banko:
Thank you for coming and hanging out.

Tod Petty:
We appreciate your-

Melissa Banko:
And talking all things senior living.

Tod Petty:
Yeah, awesome. Thank you.