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2021 Seniors Housing Trends

12/15/2020

 
There is virtually no one who has avoided being impacted by the seemingly never ending Covid Pandemic crisis. And if that weren’t enough in 2020, most of us also are feeling the effects of election fatigue! The economic fallout felt throughout the country has been significant. However, this is not the first crisis our industry has dealt with in this century. Let’s not forget the assisted living building boom of the early 2000’s. Or the Great Recession. Each and every time, the seniors housing and care M&A market has recovered. As a result, investor interest in the seniors housing and care sector continues to show its strength.

A number of factors are drawing interest from investors, not the least of which are the encouraging demographics. In fact, the 75 and over population will grow by close to an additional five million potential residents in the next five years alone. The sector also has consistently produced both strong income and strong appreciation returns for many years. And while this investor interest has grown, it has also lead to greater transaction velocity and liquidity relatively consistently. All while the sector has shown itself to be recession resistant as well. Rent growth has been stronger and less volatile than it has for other property types. In short, the Seniors Housing & Care market boasts solid market fundamentals. The current slowdown will ease and we expect continued strong asset acquisition activity in the long term.
AVERAGE MONTHLY RENT BY CARE SEGMENT (As of 4Q19)
AVERAGE MONTHLY RENT BY CARE SEGMENT (As of 4Q19)

COVID CHANGES
​THAT MAY BE LASTING
  • Telehealth
  • Higher operational costs
  • Enhanced digital communications
  • Virtual Tours and Online Marketing are here to stay
EMERGING TRENDS
  • Increasing marketplace need for lower
    ​cost housing options
  • Early generation AL props are aging
  • Technology innovations
  • Labor shortage continues
  • Rising Labor costs

NEWS YOU CAN USE
  • Development costs continue to rise. Many report the cost of new AL developments and additions to come in as high as $183 to $317 per gross square foot (up almost 7% over last year).
  • Data from the past year indicates that 55% of AL providers nationally have offered some sort of Rent concession in 2020.
  • One recent study found that one of the biggest opportunities to improve family satisfaction is by providing significant access on a regular basis to the manager/administrator/executive director.
  • While the pandemic was unkind to everyone’s occupancies, it has helped slow down new construction starts and facilitates pent-up demand going forward.
  • A recent survey taken from respondents 75 and over indicates that seniors number 1 request of their loved ones is that they call more often. ​

ASK THE INVESTOR

Why is filling my beds, especially the last few, considered so important when I am considering listing my property for sale?

Above 75-80% occupancy, most of the added revenue isn’t required to cover added, incremental expenses related to the new residents. Instead MOST of the additional revenue drops right down to the bottom line as additional profit margin! Do the math. Take your average resident fee at an incremental profit margin of 70%. This is your new cash flow per additional resident per month. Multiply by twelve (months) and see how much your cash flow increases annually for each additional occupied bed. This could very well increase the value of your property/business significantly!

LeClaire Commercial, LLC

Specializing 
in Seniors Housing since 1992
​
Confidentiality assured approach
Commercial Association of Realtors 
award winning broker 

CALL US FOR ALL YOUR SENIORS HOUSING BROKERAGE & CONSULTING NEEDS 


414.416.3001

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    Authored by Robert LeClaire, Principal of LeClaire Commercial, LLC

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