With the aging population in America, senior housing has become an attractive investment option. This article analyzes the market potential, common types, major players, considerations and tips for investing in senior housing. There are opportunities as demand rises but also risks like staffing challenges. Evaluating location, partnerships and positioning are keys to successful senior housing investments.
Senior housing demand is projected to grow substantially with aging baby boomers, supporting development.
The senior population in America is expected to grow significantly in the coming decades as baby boomers age. For example, projections estimate the 85+ population will reach 14.4 million by 2040, up from 6.5 million in 2019. However, senior housing inventory is limited – only about 2 million beds nationally. With demand rising faster than supply, opportunities exist for development, acquisition and management of senior housing properties.
Main senior housing types include independent living, assisted living, memory care, nursing homes and CCRCs.
Common senior housing types include: independent living communities for seniors still able to live independently, assisted living facilities that provide daily living assistance, memory care units focused on Alzheimer’s/dementia patients, nursing homes with skilled nursing care, and CCRCs or continuing care retirement communities that offer multiple levels of care. Investors can target specific housing types based on local demand, regulatory requirements and partnerships.
While fragmented, major public senior housing companies like Brookdale face challenges.
The senior housing industry is highly fragmented, with most providers operating fewer than 5 communities nationally. However, public companies like Brookdale Senior Living, Sunrise Senior Living and others are the largest players in the space. With intense competition, many have faced financial pressures and falling occupancy. But their scale provides valuable branding, procurement and back-end synergies.
Staffing recruitment and retention is an ongoing operational challenge.
With senior housing remaining a labor-intensive business, staffing is an ongoing challenge. Growing caregiver demand and high turnover lead to shortages, while wage rates remain depressed compared to healthcare roles. Maintaining qualified staff via training, culture and partnerships is key for providing quality care.
Investors must evaluate market demand, local partners and positioning.
Successful senior housing investments require careful evaluation of the local market to size demand properly, finding an experienced operating partner if new to the sector, and positioning/differentiation from competitors through unique offerings, pricing and marketing. While demand grows, recovery from the pandemic makes new development risky in the short term.
With America’s aging demographic trends, senior housing presents a compelling long-term investment opportunity. However, investors need to carefully assess market factors, legal requirements, staffing abilities and positioning to mitigate risks and generate sustainable returns.