The Senior Housing and Healthcare industry is becoming more and more attractive to investors and developers, as the demand increases with the aging population. Senior housing and healthcare is drawing investment interest from management and development companies with little to no experience in the industry, particularly from the multifamily and hospitality sectors. Senior living industry leaders agree that new competition is welcome, but they also acknowledge that there are risks involved in the short term. The companies that prepare adequately for the risks and choose the right partner will be the ones that thrive in this evolving market.
Kathryn A. Sweeny of Blue Moon Capital Partners LLC says that “it is scary in the short term. Despite all the best efforts from those coming from multifamily and hospitality, they’re going to make mistakes. The inexperienced will create some stress against the experienced, and that will take some time to work its way through the system. Ultimately, I expect some of the inexperienced won’t prevail and will provide a buying opportunity for more experienced operators.”
Underestimating the importance of operations in a senior living community is an issue that new developers and managers entering the market often face. Jason Childers, principal of 2Ten Consulting recognizes the importance on operations in senior living versus multifamily housing. “Operations of the community are the biggest difference between multifamily and seniors housing – the amount of employees and services you’re providing. While new entrants understand, they seem to underestimate how crucial that component can be,” Childers explained. This could result in disastrous consequences to the community, including potentially being a danger to residents.
On the other hand, the new entrants to the industry also bring fresh perspectives that could benefit the industry. A new entrant with little senior housing experience will have its own ideas how to develop, manage, and operate a senior community. If those new ideas work, industry veterans are likely to adopt some of those ideas into practice. New entrants to the industry also presents new joint venture opportunities, as those who wish to enter the senior housing market may want to join forces with an experienced developer or manager instead of trying it alone. “Senior housing is not a real estate business,” Matthew Phillips, Executive Vice President of Senior Lifestyle Corporation said. “It is providing care and attention to the needs of seniors, especially as you go up the continuum. Individuals who come in and who are not focusing on the operational aspects of a community will likely have serious problems.”
Senior housing industry leaders are also excited about the new investor attention, as it may help to lead a larger percentage of older Americans to consider senior housing. Hopefully with the new innovations new players are bound to bring to the industry, the demand for senior housing will increase at an even higher rate.
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Cambridge Realty Capital specializes in providing financing and capital for senior living facilities, whether you are looking for capital to complete a merger or acquisition, or make improvements to an existing facility. For any questions regarding finance and capital for your Senior Living initiative, contact Cambridge Realty Capital.