Investors' top worries for seniors housing in 2018

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Cover detail from CBRE's Winter 2018 “U.S. Seniors Housing & Care Investor Survey Update.”
Cover detail from CBRE's Winter 2018 “U.S. Seniors Housing & Care Investor Survey Update.”

The changing regulatory environment may be top-of-mind for senior living owners and operators, but that is not the case for seniors housing investors, developers, lenders and brokers — at least those whose opinions are conveyed in commercial real estate services and investment firm CBRE's Winter 2018 “U.S. Seniors Housing & Care Investor Survey Update.”

In fact, potential regulatory changes came in last place among respondents ranking a list of six ways that market changes could negatively affect the seniors housing and care market in 2018.

More than one-third of survey-takers (35%) said their top concern was increased property-level operating and development costs due to staffing availability and cost increases.

The next highest-ranking concern was increased construction activity, or oversupply, identified by 30% of respondents.

Twelve percent of participants said their main worry was increasing interest rates. Ten percent of respondents said they were especially troubled by increased competition for acquisitions and capital placement.

Six percent of investors, developers, lenders and brokers cited negative changes to the economic environment, such as declining home values and rising unemployment.

Only four percent of respondents said their top concern was the changing regulatory environment. Three percent of participants said they had no concerns.

“With construction starts down, operators are focusing more on property-level operations,” the report authors said.

Among other points, the survey also sought to better understand changes in the time from offering to contract for sales, which CBRE noted can indicate investor interest. Almost half (49%) of survey participants said that marketing time had not changed for them recently, but 38% said that the length of time between offering and contract had increased. CBRE said this finding reflected limited supply available for sale.

Types of properties covered in the report include active adult, independent living, assisted living, memory care and continuing care retirement communities as well as skilled nursing.

See the whole report on CBRE's website.

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