Ian Ritter is online content manager at GRS Group
Supposedly there is too much senior housing under construction. This is baffling. Isn’t a huge portion of the population getting ready for retirement and looking to downsize from large suburban houses?
Well, apparently not, according to the Wall Street Journal. It recently had an article that said there is more senior housing being constructed than demanded. This has sent some of the prices of the biggest REITs in the arena in a bit of a slump. Health Care REIT, HCP and Brookdale Senior Living are all seeing their shares take a dive.
This is due to several analysts that said there is too much senior housing coming online. The reasoning behind it is that more people reaching retirement age are much healthier than before and don’t need to use such facilities. Markets that supposedly have WAY too much of these assets in the pipeline include Atlanta, Chicago, Dallas and San Antonio.
Still, there are nearly 10,000 people a day turning 65 in the United States this year. And these are not the typical assisted-living properties that we have seen in decades past. Nowadays facilities have luxury amenities, such as gyms, pools, nice common areas and built-in Wi-Fi that one would see at some of the newer student housing developments popping up on the market.
Who wouldn’t want to live in some of these complexes if they are looking to downsize?
Maybe it’s where they are being built. Like Millennials, today’s seniors want an experiential living environment that is more associated with urban areas, where they can dine, shop and do other activities on foot, without having to get into their cars. This is not going to be the case if new senior housing is built in greenfield areas where a vehicle is required to take advantage of local amenities. Gone are the days of taking buses to see the local big band play jazz for an hour at the community center.
Adaptive reuse of older buildings in high-density areas is not just a trend that will go away. People of all ages, from those in their 20s, to people on the road to retirement, are interested in these types of developments.
REITs that specialize in senior-housing real estate are surely tuned into this, but if more assets were freed up for this type of space, worries about over development would probably not be such a factor.