Senior Living Sector Poised for Recovery in the Next 12-18 Months
According to Aron Will, CBRE’s vice chair and co-head of National Senior Housing Practice Capital Markets, the senior living sector is expected to experience a strong recovery over the next 12 to 18 months. Will even goes as far as stating that it will outperform the rest of the real estate industry and become a “darling child.”
In a video produced by CBRE, Will expresses his optimism about the sector, noting that operations are showing tremendous promise, marking an inflection point for the industry. He predicts that the sector will be very active and necessary within the next two years.
However, there may be some challenging aspects to this recovery. Will acknowledges that there is a lot of pent-up activity that needs to clear, even if the outcomes are not as favorable as hoped. He anticipates many sales of assets and lease-ups that may not meet the expected valuations.
Furthermore, the senior living sector is still recovering from the summer of 2022 when interest rates rose and caused a significant shift in the capital markets. Despite this setback, Will believes that sales and finance in senior living will thrive over the next year and a half.
Will also expects reemerging core plus capital in the sector, indicating an increase in relative value plays for senior housing. This suggests that there will be good investment opportunities for high-quality senior housing developments in the next 12 to 18 months.
Supporting Will’s prediction, occupancy rates in active adult, independent living, assisted living, and memory care are on the rise. This reflects a growing demand for senior living options among the aging population.
Will’s positive outlook is backed by the recent NIC MAP market fundamentals report for the third quarter, which was released by the National Investment Center for Seniors Housing & Care. The report reveals that senior living occupancy rates could return to pre-pandemic levels as early as 2024.
Will emphasizes the resilience of senior housing during the recession and the essential nature of this sector compared to the rest of the commercial real estate industry. He believes that senior living will become a standout performer in the coming years.
In conclusion, the senior living sector is expected to experience a robust recovery over the next 12 to 18 months, surpassing other segments of the real estate industry. Despite challenges such as pent-up activity and suboptimal valuations, the sector is showing promise and attracting increased interest. Occupancy rates are also indicating a growing demand for senior living options. With predictions of a return to pre-pandemic occupancy levels in the near future, the senior living sector is set to become a highly favored investment opportunity.