Investors are increasingly eyeing senior housing and plan to increase their buying within the sector over the next 12 months, according to the CBRE U.S. Seniors Housing & Care Investor Survey. Sixty-two percent of investors surveyed say they intend to increase the size of their portfolios with elderly living segments over the next year.
“Senior housing demand should remain at relatively healthy levels through 2019, given expected steady economic growth and lower mortgage rates,” says Jeannette Rice, Americas head of multifamily research at CBRE. “Demographic trends are positive for the asset class, with the baby boomers nearing the traditional age for senior housing and nearly 9,000 turning 70 every day this year.”
“Lifestyle” senior housing, which centers on catering to active adults who tend to be at the slightly younger demographic of seniors and has fewer service options, seems to have the most investor appeal. Independent and assisted living housing were tied for the most preferred segments within senior housing among investors, according to the CBRE survey.
On the other hand, Memory Care remained the least attractive housing segment to investors, which CBRE researchers note could be due to overbuilding within this sector in recent years.
Investors’ top concerns with senior housing are property operating and development costs and oversupply in construction activity.
“With new supply beginning to taper, operators will leverage rent growth to help offset rising costs and maintain a healthy bottom line,” says Zach Bowyer, senior managing director of CBRE’s Valuation & Advisory Services. “We are beginning to see innovative design trends, operating models and technologies take hold as potential industry disruptors. It’s a very exciting time to be in this space.”