Senior Living Emerges Strong, Post-Recession Hiccup

While being resilient throughout the course of economic cycles, senior housing as a whole has also been flexible to meet the needs of a shifting, but steadfast demographic, said industry panelists in an interview with The Commercial Real Estate Show  this week.

Assisted living, say industry particpants, is growing at rapid pace among the various senior housing product options, and while location is paramount from a development standpoint, that location isn’t necessarily the warm-weather destination it once was, the panelists noted.

“Through the recession … this sector showed a lot of resilience,” said David Boitano, senior investment officer at Chicago-based REIT, Ventas, Inc. “Initially occupancy rates saw a little hiccup, but underlying demand for health care services provided was what drove it though. That hiccup quickly recovered and encouraged more investor demand. If you can get it constructed and properly staffed and operated, you will have the demand to be successful.”


But services demanded are shifting strongly along with the aging population that is living longer, and requiring more assistance upon move-in in many cases, said George Yedinak, SHN’s founder and publisher.

“Independent living is moving toward assisted living and skilled nursing,” Yedinak said. “Service also segments into each of those areas that will fit baby boomers in years to come. Assisted living continues to grow at a very fast pace and that continues into adding Alzheimer’s and dementia care.”

The rising acuity is putting additional pressure on operators, he added, as people are prolonging the move into senior living communities.


“What we see is that people are waiting longer and longer to move into assisted living until it’s almost too late,” he said. “There are such high levels of acuity, it can create risk for operators.”

REITs, which have long held an interest in the senior housing sector, are still seeing more opportunity in the market, as are other investor types that are newer to the sector.

“Because of the performance of these sectors, it’s attracting more capital to invest in these properties,” said David Hegarty, president and CEO of Senior Housing Properties Trust, another healthcare-focused REIT. “There are various health care REITs and also private equity players looking to get into the space and invest.” Private trusts and traditional real estate investors are also looking at the space as a potential area of growth, he said.

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That growth opportunity may exist not just in traditional “retirement” locations, the panelists agreed, but across the entire U.S. as retirement ideals shift away from climate restrictions and more toward family and friends.

“One size does not fit all,” Hegarty said. “Around the country, there very successful urban locations. The market area is within a 5-mile radius with 90% of consumers coming from that 5-mile radius. Before 9/11 everyone wanted to go to the South. Now they are wanting to be closer to home.”

It’s a trend that has been realized in recent years, Yedinak said.

“We’re finding more often than not seniors are looking to stay close to friends and family as much as they can rather than moving their lives. So it’s delivering product to a local market that provides access to friends and family as well as housing and care.”

Listen to the segment.

Written by Elizabeth Ecker