Staffing Remains Top Challenge as Senior Living Industry Waits for Market ‘Reset’ 

Senior living providers must innovate to make working at their communities a “desirable job” while simultaneously working through a tough capital environment to continue growth and margin expansion.

That’s according to Lument Managing Director Casey Moore in reference to a recent survey from Senior Housing News and Lument. The 2024 Senior Living Outlook Survey and Report, released earlier in January, profiled companies across the industry to check the pulse on the biggest opportunities and challenges facing providers in the year ahead.

Among the survey results’ top takeaways is that operators must take a closer look at recruitment and retention to better attract workers from outside the industry.


“It’s an issue before the pandemic and it’s going to continue to be an issue as the demographics of the country get older,” Casey said. “So it’s how we as an industry make working in senior housing a more desirable job.”

More than a third of respondents to the 2024 outlook survey said they think that staffing issues will improve beyond 2025. But another 33% said staffing could improve in 2025, while 22% said staffing might improve in the second-half of this year. 

Increasingly, operators are having to consider more robust hiring and benefit packages for staff while also managing rising expenses. That culminated in a fair amount of margin compression industry wide over the last three years, Casey added.


A total of 46% of respondents said staffing would be the greatest challenge this year, followed by interest rates and occupancy gains at 23% and 13%, respectively.

“I personally am not sure that [operators] are ever going to get back to where they were with low-to-mid 30% operating margins and at the moment they’re in the low 20th percentile,” Casey said. “In getting back to the high 20s, operators can make deals work, give pay raises and make distributions to investors which will go a long way to soften the blow of higher capital costs.”

A total of 41% of operators that responded to the survey said they believe margins would be 1% to 4% higher in 2024 compared to last year, while 30% of respondents said margins would be between 1% and 9% lower than 2023. A total of 18% of respondents forecasted higher margins between 5% and 10% or more this year.

“The majority of people thought the industry was on the upswing and working through this year and getting to 2025-2026 where the demographics kick in will be helpful,” Casey added.

In planning the year ahead, Casey noted operators should focus on expense control, which could have a positive cascading effect on wider operations and staffing.

While capital markets haven’t been as robust in recent months due to elevated interest rates, Casey said transaction activity would continue to follow a similar pattern seen recently in which distressed assets are trading hands, rather than Class A-type assets. Thirty-six percent of respondents said they would buy senior housing assets this year followed by 27% saying they would hold assets.

“There are borrowers in problem situations and they are trying to solve them but some of those situations are not going to resolve themselves to everyone’s outlook,” Casey said. “There are a fair amount of deals that have to be right-sized and that’s going to cause some pain in the industry.”

That’s due to deals being previously “over-leveraged,” he said, and that he doesn’t see the industry in for lowered interest rates “anytime soon.”

“I think it’s going to take a good part of 2024 for that to play out,” Casey said in terms of a reset in deal activity. “As long as there is margin compression, there’s going to be value compression. It’s not what everybody wants to hear but it’s just the math of things.”

To capture demand going forward, Casey said operators must consider making affordability a focal point in future growth, and having seen current building rates at $300,000 per unit with Lument, he added that “bypasses the middle market.”

Forty-two percent of respondents said they would consider acquiring existing middle-market properties while 23% said they would develop middle-market units to capture future demand.

“Buying an older product and renovating it, I think that could go a long way towards making much more middle market products,” Casey said. “From an investment perspective the industry is in pretty good shape, but you have to get the capital reset first.”

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