Investing in the Future of Aging Adult Care

Assisted living properties provide a recurring source of income and surefire demand, observes Northmarq's Daniel Anderson.

Daniel Anderson
Daniel Anderson

As the world’s population ages, there has been a shift in the preferences of aging adults who are seeking supportive living environments. While some senior living solutions serve individuals with significant health needs, many seniors who do not require daily medical care are exploring alternatives. Assisted living communities have emerged as a favored choice, offering vibrant and fulfilling lifestyles for seniors wanting to live within a community. By recognizing the appeal of assisted living communities, commercial real estate investors can capitalize on this sector’s growing demand.

What is assisted living?

Assisted living facilities are residential communities designed to provide daily support for older adults as they age. These facilities provide adequate care for aging adults, but not to the same extent of care at nursing homes. They provide many services, including permanent residency, daily meals, medication access, and emergency medical services. Additionally, seniors can participate in social activities, stay healthy with group exercises, and travel together on planned outings. Essentially, assisted living centers allow aging adults more freedom, fun, and opportunities to connect with other individuals in the community.

Residents typically reside in their own quarters, whether that’s apartments, suites, or individual rooms, and some establishments may feature a variety of amenities.

Assisted living centers are among a multitude of senior living assets that investors can choose to invest in. Other assets include multifamily properties such as independent living communities and senior housing. Commercial properties include nursing homes, short- or long-term acute care facilities, behavioral health facilities, and memory care facilities. Each has its own advantages and disadvantages that investors should take the time to consider.

Popularity among the aging population

As the next generation approaches retirement, there has been a notable shift in how seniors consider their living arrangements. They have the option to live independently, stay with adult children, or transition to an assisted living community.

There are challenges and factors to consider with each of those options. Living alone can be costly and may not allow access to proper care, and living with adult children may pose challenges with space and crowding. So, for many aging adults, the most practical solution is to choose an assisted living center that can cater to their needs effectively while still offering the freedom and balance they desire.

There are other factors that contribute to the increasing popularity of assisted living. Rising living expenses, extended life expectancy, and the need for more attention due to health issues are also reasons behind the increased popularity of assisted living. In essence, assisted living centers offer tailored care and create vibrant communities that promote independence among residents. By addressing the evolving needs of seniors, these facilities play a crucial role in enhancing the quality of life for aging populations.

Opportunities for real estate professionals

Historically, real estate investors gravitated toward multifamily complexes, commercial centers and industrial parks. But now, senior housing presents a new opportunity. In response to demographic changes and escalating demand for senior housing, real estate developers and investors are now actively pursuing these investments and capitalizing on the growing demand. Assisted living centers are lucrative sources of recurring income for investors, and there will always be aging individuals who want dedicated spaces that allow them to live as independently as possible.

This trend is supported by upcoming debt maturities, with senior housing agency loan maturities projected to exceed $19 billion over the next two years, according to healthcare REIT Welltower. Additionally, data from the National Investment Center for Senior Housing and Care shows a robust 7.3 percentage point increase in occupancy rates from the pandemic-induced low of 77.8 percent reported in second quarter 2021.

The resilience of REITs and institutional groups further bolsters investor confidence in the stability and growth potential of high-end assisted living facilities. Post-COVID, these groups have been bullish, actively seeing investments into stabilized, high-end assisted living centers. By adeptly addressing the evolving needs of seniors and offering essential services, while remaining responsive to demographic shifts and economic dynamics, assisted living facilities present real estate investors with premier opportunities for sustained expansion and profitability.

Daniel Anderson is an associate in investment sales at Northmarq.

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