Seniors Housing Weekly Update - Concerned About Pace of New Developments
March 11, 2014
Concerned About Pace of New Developments
Is this déjà vu all over again? Why is it that no one is growing concerned about the pace of new development? We now have two relative newcomers to the space who think they can build up to a billion dollars worth of assisted living and memory care communities in the next five years. They may build them, but will the residents come? According to the statistics coming out of NIC MAP, the new market supply, measured by properties currently under construction, is not out of whack with demand. The problem is that this is a static number, and does not take into effect all the planning going on. The big spike in new developments aren’t going to open until 2015 through 2018, barring an economic calamity, so today’s construction starts are really understating what is happening. We just heard of one smart, and very successful, developer and operator who has pulled the plug on future developments because of the current frenzy. He remembers, but are other memories really that short? Didn’t we do this before? Unfortunately, if you weren’t involved during the last go-round, you have no bad memory of it. And that may be our undoing.