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Seniors Housing Remains an Attractive Investment
“The Emerging Trends in Real Estate, 2018” report indicates that the senior housing and care sector continues to attract attention from institutional investors for a variety of reasons. The report, issued by the Urban Land Institute (ULI) and PwC noted that demographics, investment returns, liquidity and “emerging post-acute-care coordination opportunities” are driving institutional investors, as well as private owners, to the sector.
There are, however, a couple of cautions about this sector, one of which is inventory concerns. Since 2010, 79,000 units have come to market, according to the National Investment Center for Seniors Housing & Care (NIC). In Q2 2017, 22,000 units have come online. But the Emerging Trends report pointed out that nearly half of the growth took place in only seven markets: Atlanta, Boston, Chicago, Dallas, Houston, Miami and Minneapolis. “Not all markets have seen significant development activity,” the report noted.
The second challenge is the labor shortage on the operations side. With the unemployment rate continuing to fall, wages are climbing, and “the challenge of recruiting and retaining employees is expected only to grow,” the report observed. As such, the report advised operators to increase operational efficiency and staff productivity with better technology, training and mentoring, to grow income and maintain profits and bottom lines.
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