Senior housing and care investors expect positive occupancy recovery trends, with active adult communities re-emerging at the top of the opportunity list, according to the H1 2021 CBRE Seniors Housing & Care Investor Survey.
The 10th consecutive survey of senior housing investors, developers, lenders and brokers, released last week, provides a window into changes in market conditions as a result of the pandemic.
After claiming the top investment opportunity spot in the past two reporting periods, assisted living stepped aside as 31% of respondents identified the active adult category as the biggest opportunity for investment. Including active adult, the property types designed for older adults with a lower level of care need, such as assisted living (28%) and independent living (23%), accounted for a collective 82% of responses regarding investment opportunities.
Both memory care and skilled nursing showed significant declines in investor opportunity perception, indicating a market sentiment associated with the risk of operations related to residents with higher levels of care need, CBRE reported.
Respondents also indicated an expectation of recovery from the pandemic, with 90% indicating a positive outlook of increasing occupancy — a 20 percentage point increase from the survey about the second half of 2020. Additionally, those respondents expecting further declines in occupancy levels dropped by more than half, from 14% in the H2 2020 survey to 6% in the latest survey.
Overall, primary indications are that active adult communities will recover within 18 months (predicted by 80% of respondents), independent living within six to 18 months (63.9%), assisted living in six to 24 months (83.3%) or six to 18 months (62.5%), memory care in six to 18 months (66.2%), and continuing care retirement / life plan communities within six to 24 months (89.5%) or six to 18 months (68.4%).
Along with occupancy drops, expenses topped operational challenges for operators — specifically costs for increased payroll, sanitation and personal protective equipment.
A majority (69%) of respondents indicated that they will incorporate COVID-19-related expenses into their budgets during the preceding 12 months. Although 85% of poll participants showed a trend toward a reduced timeline for elevated pandemic expenses, those forecasting such expenses into perpetuity more than doubled from 7% to 15% — a trend requiring attention in the near term, CBRE said.