Investors Upbeat on Senior Housing: JLL

Three quarters of respondents expect to increase their exposure to the sector during the next year, according to the firm’s latest survey.

Diamond Oak Village. Image courtesy of JLL

The senior housing sector has entered full recovery mode, according to JLL Valuation Advisory’s fifth annual Seniors Housing Investor Survey and Outlook. Robust long-term demand and growing investor interest are both helping propel the sector.

Of investors surveyed, 80 percent of respondents believe the pandemic’s worst is in the rearview mirror, and that market fundamentals will continue improving. That represents an upswing from the 2021 survey, which found less than half (48 percent) of investors felt that way. As well, 76 percent of respondents anticipate growing their exposure to senior housing in the next 12 months, proof of a bullish outlook.

Considering move

“Going forward in 2022 and beyond, it is important to note that the industry has recently entered into a new 10-year investment cycle with a massive Baby Boomer cohort that either soon will be planning and-or considering a move into a retirement community,” Brian Chandler, JLL managing director, co-lead for the senior housing practice, valuation advisory, told Multi-Housing News. “The long-term outlook is that this situation will flip starting around 2027-28 and there will ultimately be a significant and magnified supply shortage in the senior space. New construction will be key to absorb this demand as well as to cater to the new generation of residents.”

In addition, middle-income seniors are expected to nearly double by 2029, growing in number from 7.9 to 14.4 million, he said.  “At this time, over half of the middle-income seniors will potentially not have adequate finances to afford assisted living. This suggests that there will need to be more investment made in this sector to assure there is affordable housing and care available for these seniors.”

Stable asset

The sector is in the recovery phase, but continues to be supported by robust long-term demand and growing investor interest, said Bryan Lockard, JLL managing director, co-lead for the senior housing practice, valuation advisory.

“Senior housing is one of the most stable asset classes due to the potential long-term demand in this sector, as well as the advancements . . . made in medical/life sciences, which (are) increasing life expectancies for the senior population.”

Last month, JLL arranged a four-year, floating-rate loan for Calson Management to develop Bascom Senior Living in San Jose, Calif.

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