Integra Realty Resources Offers Analysis of the Senior Housing Market

HousingIntegra Realty Resources (IRR) recently published its 2016 Commercial Real Estate Trends Report, and as always it contained a number of items of interest with respect to the Senior Housing industry. The report recognized the continuing strong demographic trend of 1.7% annual population growth in the 80-plus age group – those most likely to move into a senior housing community.  But the report also provided a reminder that the “Silver Tsunami” of retiring Baby Boomers hitting that magical age of 80 won’t hit until 2026 – still a decade away.

This made us take a step back and think about the significant construction that is occurring in the senior housing sector – which developers hope will be filled by pent-up demand released by the improvement in the housing market and the ability of seniors to sell their homes and move into senior communities, as well as the expected new demand driven by demographics of the aging populace. There seems to have been a significant shift towards building communities with more amenities and designed to promote a “neighborhood” feel within buildings.  These trends seem like ones that are likely to sustain the test of time, but with the ever-increasing pace of technology and change in the interests of consumers, it will be interesting to see if in 10 years what today seems cutting edge then seems dated.  It might be wise for owners of senior housing to increase their capital expense reserves so that as these trends change, they are in a position to update their facilities and keep them cutting-edge rather than risk falling behind and losing occupancy to newer and shinier communities.

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