Opportunities and Forecasts in Senior Housing

Robb Chapin

ORLANDO, FL—Even with a healthy dose of optimism within seniors housing, post-acute, and skilled nursing sectors, 2018 was filled with some challenges as new supply growth in seniors housing slowed down occupancies and the skilled nursing sector changed its reimbursement system. The year, however, ended with promising news as the industry continued to face levels of supply growth which exceeded absorption (occupied unit growth).

SILVER TSUNAMI

In 2019, seniors housing is now one of the most attractive segments in the U.S. commercial real estate market for several reasons starting with the unprecedented demographic “imperative affectionately described as the “Silver Tsunami” which are the 73 million plus baby boomers coursing through America,” says Robb Chapin, Chief Executive Officer-Seniors Housing and Medical Properties, Bridge Investment Group.

With the “silver tsunami,” large number of seniors are living longer and thus, driving the need for high quality living and care creating a long-term demand cycle. Because demand is “needs and demographic driven,” seniors housing incorporates very durable fundamentals providing more stable occupancy and rent growth that are not as correlated to the broader economic markets. Occupancy variance is comparable to multifamily, which is traditionally viewed as a “defensive” real estate class, Chapin tells GlobeSt.com.

SUPPLY AND DEMAND

Overall, there is a stable balance of supply and demand with the exception of some oversupply in certain markets which ultimately will be absorbed even though it may take longer and create challenges for some owners.