I’ve been helping clients develop and manage seniors housing projects in a national market that has experienced steady growth in recent years. Seniors housing is need-driven with many seniors moving into independent living, assisted living, or memory care facilities in their early 80s. Demographers tell us that birth rates dropped during the Great Depression, and began moving upward again about 83 years ago in 1935. And, we are all aware of the post-war Baby Boom. With the sheer number of seniors increasing, the seniors housing market will experience a "Silver Tsunami" in the coming years powered by vocal Boomers who are more proactive about putting aging plans in place as they approach their 70s and 80s.
Oregon is a top market for seniors housing according to the National Investment Center for Seniors Housing and Care (NIC). A recent Oregon Business article on the state’s aging population points out that Portland Metro alone has a 22.7% penetration rate (the percentage of potential customers the industry serves), which is more than double the national rate of 11.2%. That does not mean the market is saturated.
As Boomers consider seniors housing, they are demanding a wider variety of configurations and services to support their goal of maintaining a healthy, active lifestyle. Independent living options that are close to activities and neighborhood amenities are a priority for private-paying occupants, not to mention lenders, since these are the property types that tend to bring the best returns. Residential layouts with private apartments or that have a home-like feel with concierge style services are preferred by senior consumers who can afford them. Some companies operate independent living, assisted living, and memory care in the same property (or near each other), which allows residents to remain in familiar surroundings if they require more care.
Development of all types of seniors housing assets is poised for growth. Investor interest from overseas is rising, and lenders are listening as well. In the first quarter of 2018, there were already at least nine new assisted-living projects under construction in Oregon.
Seniors housing is a unique market that doesn’t necessarily conform to broader real estate forecasting and returns data. But regardless of the market's quirks, it’s undeniable that we will experience a wave of savvy, aging consumers who want options in their housing. The opportunities are best-suited to investors, builders and owner/operators who already have experience in seniors housing and have a solid handle on the fundamentals that are unique to developing and operating seniors housing. The tide is rising and opportunities exist nationally and locally for those ready to catch the wave!
