A recent report by the National Investment Center for Seniors Housing and Care (NIC) shows that new senior housing development reached a peak in the third quarter of 2015, hitting the highest level of activity the industry has seen since 2008. This represents a remarkable quarter in terms of economic activity and highlights the continued upward trend in both supply and demand for senior housing, facilities, and other living spaces in the U.S.
The report specifically identifies that for the third quarter, there were “about 44,000 senior living units were under construction as of Sept. 30 in the nation’s 99 largest metropolitan markets, accounting for 5.2% of existing inventory, according to NIC.” The significance of this information is that such “figures represent the most units under construction and the highest rate of construction as a share of existing inventory since NIC started tracking the data, writes Beth Mace, chief economist and director of capital markets at NIC.”
As senior living construction continues to compose a higher share of existing inventory, construction and development firms will find that such housing represents a significant departure from traditional home-building, where senior living units will not necessarily peak in terms of demand, but will continue an upward trajectory. As one investor has so aptly described, “because assisted living is more need-based as opposed to choice-based, it held up a little better during the recession [and] there’s now more investor interest as a result.” Additionally, other financial projection have set forth that construction activity is expected to remain “relatively robust” for the next 12 to 24 months, and investors are taking note [where] 41% of senior housing professionals who participated believe new development will provide the greatest investment opportunities in the coming year.” Given such projections, the typical investor can and should reasonably expect that senior housing facilities, including construction-based projects will continue to rise and constitute a significant percentage of development based projects in the U.S.
Senior Housing providers are at a pivotal moment in time, where there are many providers taking economic advantage of the trends among senior residents to seek housing and care facilities. Cambridge Realty Capital is versed in a variety of investments in the senior housing market. Our experience and expertise make us a leader in the investment world.