While there have been some concerns raised about potential overbuilding in the senior housing market, demand for new properties continues to be strong due to a number of different factors.
Occupancy rates have been steady as today’s seniors continue to live longer and need more care as they age.
However, much of that population may gravitate toward newer developments instead of current facilities. Some of the existing supply is in need of renovations, since it doesn’t fully meet the social or technological needs of potential residents.
Even though most people aren’t entering senior housing facilities until their 80s, many are still in good health, and looking for vibrant independent living communities. However, since those seniors will need more care as time moves on, many newer facilities are developing age-in-place services, so seniors do not have to move units as their needs change.
“You rarely see a new independent care facility which doesn’t have memory and assisted living care,” says Richard Swartz, an Executive Managing Director at Cushman & Wakefield and the company’s National Head of Senior Housing. “Residents and their families both like that seniors don’t need to move units as they need more services.”
A great deal of new senior housing supply has also been built during the past several years, and more is in the pipeline, which has created some fears of overbuilding.
The challenge in ensuring the market remains balanced is that the different levels of care and varied health situations of seniors across the country create a multi-tiered system. Each local market will need to find the proper balance between independent living, assisted living, and nursing home care based on its residents’ health, and then adjust as they age and care needs shift.
At the same time, the industry needs to prepare for the upcoming wave of Baby boomers – a group with is more than 60 percent larger than “silent generation” born between 1928 and 1945.
The first baby boomers will start hitting their 80s in 2026.
Demand in the Massachusetts and New England senior care markets may need to be weighted more heavily toward the independent care sectors compared to national averages, as seniors in the region are among the healthiest nationwide in a recent study by the United Health Foundation. Massachusetts seniors had the best health nationwide, and all six New England states finished no worse than 11th.