- Post-Pandemic Environment in Senior Living Development
- Demographics Don’t Lie
- Factors in the Recovery
- Investor Confidence
Post-Pandemic Environment in Senior Living
Covid-19 impacted nearly every aspect of the economy over the past year and a half. This included the senior living sector affecting developers, investors, and operators alike.
Occupancy in senior housing was down 6.8% from Q1 to Q4 in 2020 because facilities couldn’t welcome new occupants after residents moved out or passed away. However, there is reason to be optimistic. There are exciting opportunities in the senior space as the industry adapts post-pandemic, investing in developing a smart move.
A rebound is already underway
The recently released 1Q2021 NIC MAP® Seniors Housing Actual Rates Report showed that for the first time since the pandemic began, move-ins outpaced move-outs for both Independent Living and Assisted Living communities. Move-ins also exceeded move-outs in the Memory Care segment.
Sixty-seven of the 99 NIC MAP Primary & Secondary Markets for seniors housing saw an increase in occupancy since March 2021.
- About nine out of ten organizations reported an increase in lead volume (89%)
- One-third of organizations report lead volume currently above pre-pandemic levels (35%)
- Nearly two-thirds of survey respondents expect their organizations’ occupancy rates to recover to pre-pandemic levels sometime in 2022
The bottom line is that the overall NIC MAP Primary Markets aggregate occupancy rate reported no declines for two consecutive monthly reporting periods of April and May 2021.
And future occupancy growth will be robust as Baby Boomers age. Many experts are bullish with the second half of 2021 and beyond looking strong.
Valued at 83.2 billion dollars in 2020, the assisted living market should expand at a compound annual growth rate of 5.3% from 2021-2027 to reach 119.2 billion by 2027.
Demographics Don’t Lie
The population aged 65 and older will grow by 66 percent through 2035, an increase of more than 31.4 million. That group’s share of the population will grow from 15 percent to 21 percent.
For the 80-and-over age group, the age when many people enter senior housing, the rate of population growth will be even sharper. This age group will increase from 12.1 million in 2015 to 15.7 million in 2025.
By 2035 the number of people aged 80 and over will reach 24.2 million. Seventy percent of that growth will occur from 2025-2035 when the leading edge of the baby boomers passes age 80.
In addition to the demand for Independent Living and Assisted Living options, there’s a growing need for Memory Care facilities. As life expectancy has increased, so has the prevalence of dementia.
The Alzheimer’s Association estimates that 5.8 million Americans 65 and older are living with the disease. That number will rise to 7.1 million people by 2025, increasing nearly 22%. By 2040, the number will climb to 11.6 and by 2050 to 13.8 million.
It’s evident that demand won’t slow down any time soon. According to the American Seniors Housing Association (ASHA), the United States may need more than 3 million senior housing units by 2040, 1.8 million of which still need to be built.
Factors in the Recovery of the Senior Living Sector
In addition to the aging Baby Boomer generation, other reasons for the rebound include:
- The Arrival of COVID-19 Vaccines: Vaccines are contributing to an increase in consumer confidence. In a recent NIC survey, the number of respondents citing resident and family member concerns as causing a deceleration in move-ins decreased from 74% in the previous survey to 38%.
- Stronger Than Expected Residential Home Sales Many seniors use home sales proceeds to finance their move to Independent Living, Assisted Living, and Memory Care communities.
- Lack of Development During Pandemic: Because there’s been so little property development during the pandemic, there is a backlog of people to bump up occupancy.
Investor Confidence in Senior Living Development
According to Senior Housing News, investor confidence is rebounding – investment activity increased 31% in Q1 2021, closing with 2.4 billion in volume, which is the highest quarterly volume since the pandemic began.
Along with the rebound will come innovation and reinvention, including advances in safety features, access to technology that seniors have become accustomed to during pandemic lockdown, and high-end amenities.
Covid-era safety features will remain after the pandemic and new ones will emerge. PPE and infection control including air filtration and cleaning protocols will be holdovers. Strategies needed to deal with future health emergencies include isolation, increased access to outdoor space, and redesign of common areas.
Residents will use technology to combat isolation and for entertainment. Virtual visits with family will supplement in-person visits, and video streaming put in place for safety during the pandemic for exercise and learning will continue.
Integrated care will include both telehealth and onsite care offering flexibility and individualized service. These services will adapt as residents age to offer a continuum of care.
Baby Boomers expect updated amenities and a variety of experiences. The future of senior living will include fine dining, gourmet kitchens, and concierges. Fitness is important to this generation necessitating swimming pools, virtual golf, and fitness centers. And, they expect fun so it won’t be uncommon to find wine tastings, video games, and spas.
Where investors and developers are concerned, all of these factors will play into the profitability of future developments. We must see these trends and adapt to meet the growing need of seniors housing across the United States.
Our Development Outlook for Senior Housing
Concord Development Partners is looking to the future, recently breaking ground on its newest property, a 132-Unit Seniors Housing Project on three acres in Mission Viejo, California. Keeping with current trends in senior housing, the state-of-the-art community will offer studio, one- and two-bedroom suites. Other amenities include a pool, dog park, community garden, dining area, spa, and wellness center.
CDP’s targeted investment strategy focuses on regional locations and metro areas for development opportunities. Our team’s unique knack for market research and site selection allows us to see investment and partner opportunities while staying ahead of the curve.
As affluent baby boomers age, they expect more in retirement living than a sterile “nursing home” environment. They want to live an active life without the hassle of mundane chores like lawn work or meal prep. At Concord Development Partners, we understand and anticipate the wants and needs of seniors.
As the general economy recovers, growth in the senior housing sector is certain. We approach each project, opportunity, and partnership through a lens that promises to produce the best results possible for all stakeholders involved.
Grounded in our core values and inspired by serving the greater community, the team at Concord Development Partners is fully committed to our investment approach.
With over 20 years of experience, Concord Development Partners built their team with the intention of getting exceptional results from every project. Each team member brings a passion for quality and commitment to our core values that drive every decision we make.
To see how our approach to development, acquisitions, and real estate works, connect with our team.