The pandemic has forever changed the senior living sector, according to a new investment outlook report from real estate investment firm Marcus & Millichap.
After a challenging year, the report notes that the rollout of the COVID-19 vaccine is a light at the end of the tunnel for operators.
“Care providers face a long path to full recovery in 2021, characterized by new operational initiatives and an increased focus on clinical care, utilizing lessons learned through the health crisis to restore consumer confidence,” the report authors wrote. They also predicted that senior living will play a more significant role in the healthcare continuum moving forward and will be likely to lead the development and implementation of evidence-based outcomes to improve the quality of life and safety of residents and staff.
The firm pointed to assisted living in particular as the segment within senior housing that has cemented its position in the healthcare marketplace.
“Assisted living will be permanently reshaped by the pandemic with operators placing a greater focus on health and wellness, while also harnessing technology to meet resident needs more appropriately,” the report stated.
The firm noted that although near-term challenges to property performance remain, long-term demand for assisted living will lead to a solid recovery for most markets, with recovery expected to pick-up by midyear. “The daily care needs of the aging population and the elevated expense of home health aides will ensure momentum for the industry over the coming quarters,” the authors wrote.
They also anticipated that the Southeast and Southwest regions will register outsized growth of the senior cohort as retirees seek warmer climates. This growth will drive demand for modern and upgraded communities in this area, they said.
“Developers have been active across the Sunbelt in anticipation of future population growth, which has caused supply to overshoot current demand, weighing on property metrics, particularly for the independent living segment,” authors wrote. “But the rise in population will help to absorb new units and better align supply and demand characteristics.”
