As published in Scotsman Guide's Commercial Edition, August 2007.
By 2030, there will be more than 72 million people ages 65 and older living in the United States, according to the U.S. Census Bureau. That will account for 20 percent of the population.
"Certainly not all of [these people] will be interested in senior housing," ASHA President David Schless says. "But growing numbers of them will."
Schless tells us more about how and why.
What major changes have occurred in senior housing in the past year? Senior housing has been embraced by a larger group of institutional investors who have historically considered the property type too risky.
Many different factors that have led to this. The industry, ASHA included, has worked hard to improve the data for investors considering investing in senior housing. The senior-housing market now has a demonstrable track record with many developers and operators that have been successful for many years. And a lot of capital is out there for investment in real estate related assets.
ASHA's and the National Investment Center's annual report, "The State of Seniors Housing," also indicated some good things for the market. What would you say are the highlights? The report shows we have a healthy senior-housing business right now. Median occupancies are in the low-90-percent range. Certainly, there are projects with waiting lists, but they tend to be affordable senior-housing projects that offer personal-care services.
What is happening with construction in the senior-housing sector? It has had a modest amount of new construction in the past several years, following the spike in assisted-living development that began in the mid-1990s and lasted until 2001. I think the increase in construction costs has made it particularly challenging in markets with high land costs to make certain deals pencil out. But my sense is that a number of companies are looking to add existing capacity to successful projects or to begin new projects.
In some communities, residents seek to block senior-housing developments because of concerns about increased congestion. How can developers respond to such concerns? This happens to anyone trying to build a multifamily development. With these kinds of projects, some people mistakenly believe there will be ambulances in and out of the area. That's not the case. Also, there are fewer drivers in many of the older senior households, and in many cases, the housing providers offer regularly scheduled transportation to residents.
What can we expect to see in this market in the next few years? I would expect to see an increase in construction, but it will be tempered. I think lenders will make sure the markets can bear what they're considering in terms of new production. We'll continue to see consolidation in the business. As the population ages in the next couple of decades, there will be more opportunities for this industry.
Melinda Young is an associate editor at Scotsman Guide. Reach her at (800) 297-6061 or email@example.com.