Senior housing has never been an easy sector in which to do business. Requiring operations know-how, skilled labor and a willingness to assume significant liability, it carries more risk than many other property sectors. After all, human lives are at stake, many of them with some degree of infirmity. This has been exacerbated as the average age at which seniors are assuming residency has risen into the 80s.
The pandemic created additional challenges that increased liability and reduced profitability, among them some early-on, high-profile mass viral exposures with dire consequences, which deterred move-ins. Facilities were also impacted by the widespread higher costs for products and services and construction expenses. The so-called Great Resignation has particularly hurt a business intensely dependent on labor that is both highly skilled and burned out by the stresses of COVID-era caregiving. A number of players have exited the space, while some facilities have closed their doors.
Senior housing, though, has long had an ace in its pocket: the aging Baby Boomers. The oldest are now past 75, and while there is a growing desire to age in place, their sheer numbers—above 70 million, according to the Pew Research Center—nonetheless offer promise of significant demand for independent living, assisted living and ultimately more care-intensive housing.
In the meantime, challenges notwithstanding, the outlook for performance is already improving. The second half of last year produced demand for more than 21,000 units, according to the National Investment Center for Seniors Housing & Care. While independent living facilities recovered first, Beth Burnham Mace, its chief economist & director of outreach, told our reporter Beata Lorincz for her February article “What Will 2022 Look Like for Senior Housing?” that in the 31 primary markets, two-thirds of the assisted living units vacated during the pandemic had been reoccupied. And Greg West, CEO of ZOM Living, predicted strong further demand late in the first quarter, following the passing of the omicron wave.
Increased demand is attracting investors and financiers, and developers are ready to resume construction. Proptech providers are also entering the field, as Holly Dutton discusses in this month’s feature article, “The Future of Senior Housing Proptech.” Their varied solutions include some that will benefit residents, regardless of whether they’re tech savvy, and at the same time reduce caregiver workload (think sensors, not robot nurses—although robot dogs are one innovation). There are also options for the operations side, promising to alleviate some back-office stresses. Certainly, challenges remain, but such proptech solutions are making it easier to achieve senior housing success.