Current Challenges Impacting Senior Housing Development
The senior living industry is in a constant state of flux as operators and developers continue to face headwinds. From a developmental perspective, rising costs of living and supply chain issues persist, but the outlook is hopeful, if not different.
At the recent InterFace Seniors Housing Midwest Conference in Chicago, some of the biggest takeaways came from the development panel, which included forecasting predictions and insights. While concerns around lumber prices and other restrictions to new construction were hot topics, opportunities to reimagine existing properties are plentiful.
Embracing the Future of Senior Housing Development
The future of senior housing development is shifted in recent years. Yes, the pandemic has a lot to do with this, but there are other factors that are just as – if not more – important. With new investors eyeing senior housing, it’s important to understand the current state of the market.
Staffing challenges combined with rising and/or unpredictable construction costs are bound to cause developers to experiment in the coming years with new senior housing formats. On the construction side, one evolving trend is the use of SIPs (structural insulated panels), which offer developers simplified on-site construction and a much faster completion schedule. Benchmark Senior Living’s new assisted living building in Nashua NH was built entirely with SIPs.
On the staffing front, operators are also creating new models for care. Many independent living buildings (or IL wings within a larger building) are turning to an outsourcing model with best-in-class home care and wellness specialists in their area. Solera Senior Living’s new “Modena Reserve” community in Kensington, MD leases space in its IL wing to Care Plus, which offers à la carte services ranging from errands to skilled nursing services. And industry innovator Dr. Bill Thomas has announced plans to develop and operate two “Village” style co-housing communities (Thomas describes them as Multi-Ability, multi-Generational, Inclusive, Co-housing or “MAGIC”), in collaboration with the Loveland, CO Housing Authority and the Clearfield, PA Area Agency on Aging (AAA).
Green Building A Priority
Green building efforts are on the rise as the industry looks for ways to boost energy efficiency and reduce costs at the same time. Notably, SIP construction is touted for its dramatically lower operating costs and resistance to mold and other maintenance and construction problems that can be more common with traditional “stick-built” buildings. Heat pumps, solar, water recycling, and geothermal may become more and more common.
Affordability a Growing Concern
And what of the long-term “affordability” problem in the sector? Have developers begun to solve the problem that NIC’s 2019 “Middle Income” study highlighted – wherein they predict the demand for over 700,000 new affordable units by 2029? SIP, care outsourcing, and collaboration with housing authorities may point to some “solutions” but so far on a small scale. All American Assisted Living opened a community a few years ago in Raynham, MA that creates affordability largely through the use of (all) double occupancy, but that hasn’t exactly caught on nationwide. Stay tuned…
A New Generation of Seniors
With the NIC’s recent classification of active adult communities, we expect this to be one of the biggest areas within the senior housing umbrella to expand. The active adult model allows residents to select a la carte services they want, rather than the full-service model we’re used to. Furthermore, the recession and other economic challenges have shown that many Baby Boomers do not have the savings they may need to afford full-time care.
As we’ve discussed at length since the pandemic, traditional senior housing models are a thing of the past and its imperative developers, investors, and operators alike embrace the future of senior living. With markets in the Southeast and PNW attracting a new generation of seniors, we’ve entered a new age, post-pandemic. Baby Boomers and other older Americans are looking for facilities that have learned from the pandemic and take a different, more personalized approach to wellness and care. Being future-focused is a must, as is the implementation of technology, or the ‘tech concierge.’
Development Projects Evolving, Not Slowing Down
From climate concerns to changing priorities, there are many reasons senior housing development is evolving. At Sherman & Roylance, we strive to keep you apprised of the latest development and industry news. We represent buyers and sellers and rely on our knowledgeable team to support all your transaction or valuation needs. If you have questions about senior housing development, do not hesitate to reach out to George Bingham or another S&R team member. Next week, we will explore some of the economic challenges disrupting the industry, such as inflation and labor woes.