Pandemic Pressures Senior Housing: Report
A Marcus & Millichap report sheds light on the different senior housing types and how they are impacted by COVID-19.
The COVID-19 pandemic has delivered unprecedented challenges to the senior housing sector. Because the crisis disproportionately impacts older adults, the pandemic strains senior housing budgets and has led to staffing and supply shortages at seniors housing communities across the nation. In weathering the storm, the sector is benefitting from stable or rising demand and the aid likely forthcoming from the CARES Act.
These are among findings of a Special Report from Marcus & Millichap. Senior housing is seeing an influx of move-ins as hospitals free up beds for coronavirus patients. The $2 trillion CARES Act will provide emergency funds to providers to help them maintain operations. Robust investor sentiment helped send sales volume up 18 percent year-over-year. The sector continues to be eyed by potential buyers.
Differing challenges
Varied types of senior housing confront differing challenges. Independent living properties are likely to face the least disruptions, though the pandemic is helping propel a more rapid adoption of telemedicine and video conferencing capabilities. Assisted living environments have suffered a number of outbreaks of the pandemic, increasing the costs of labor and supplies. However, delays in developing new independent and assisted living communities could keep occupancies high and demand strong for existing communities.
Memory care facilities face some of the steepest challenges in keeping residents safe from COVID-19. But of all senior housing types, memory care may fare best over the coming years. The population of Alzheimer’s or dementia sufferers will grow as the elderly cohort soars. And while tours and move-ins will be slowed by the pandemic in the near term, the longer term will likely see memory care boosted, as it often is, by the conclusion of a crisis.
Large continuing care retirement communities (CCRCs) are challenged by their very size to limit outbreaks of COVID-19. But given their solid fundamentals, CCRCs enjoy what the report’s authors call a “solid foundation to withstand current economic crisis.”
Skilled nursing
Skilled nursing facilities have witnessed increasing infections and shortages of personal protective equipment. They also face the challenge of housing patients who need round-the-clock medical care. Nonetheless, greater equipment and infrastructure allows skilled nursing to stay better prepared during the COVID-19 pandemic than other housing types. The report authors also believe nursing homes will see higher occupancy near term.
Stabilized occupancy increased 20 basis points in 2019. The removal of dilapidated stock, combined with slower construction and increased demand due to COVID-19, should bolster operations through the rest of 2020.
