The SeniorCare Investor: Seniors Housing Development Rising
New Construction Picking Up Steam After Lean Years
We have all been hearing for the past several years that seniors housing development has been practically non-existent since the end of the Great Recession. After all, what lender would want to take on the risk of the unknown in an uncertain economy with a still weak housing market? In addition, feasibility studies may have been able to pinpoint market demand six years ago, but it has been much more difficult recently to get into the mindset of that 82-year old senior, let alone the eldest daughter who is most likely making the decision, when so many other economic issues are facing them.
Add to this the conundrum that for some senior housing developments, the customer moving in is actually not coming from that typical five- or 10- mile radius, but from another county or state. In fact, we were told of one new development where a significant number of the residents moving in were from out of state, and no feasibility analyst, no matter how good, is going to be able to predict that and have a lender believe it. In addition, how do you determine how many potential residents will be coming from other nearby communities when they see that a newer, better community is being built with more amenities or perhaps in a location that they prefer, or with unit sizes more to their liking? We have always heard (for a few decades) that it is difficult enough for an elderly person to move out of their home into a retirement community of any type, and that a subsequent move a year or two later would be fraught with so many problems and emotional anguish that it just doesn’t happen much. Guess what, it does happen, and as the older inventory of communities built in the 1990s that was considered to be “state-of-the-art” begins to show its age, it is going to happen with increasing frequency. As they say, it is a buyer’s market right now, and that may be one reason why development appears to be picking up steam..............Want to read more? Click here for a free trial to The SeniorCare Investor and download the current issue today