During the last week of October, The Douglas Company team attended the annual National Investment Center (NIC) for Senior Housing & Care Fall Conference in Chicago. The conference is attended by a range of people from fields across the industry — general contractors, developers, operators, lenders, architects, and many more are represented. This year, the event was well attended, and while there was very little evidence of new senior living development projects, we noticed that the overall mood was upbeat and positive.
There is good reason for the upbeat, positive mood, however. Occupancy rates have been on the upswing for eight consecutive quarters, contributing to increased revenues. The occupancy rate for the NIC MAP Primary Markets was up 60 basis points from the first quarter and well above the lows reached during the pandemic. The increase in occupancy is accompanied by a stabilization of expenses and a decline in COVID related costs. Many operators have been successful in raising rents, in many cases by double digits. All of this has contributed to improved revenues and operating margins, which is welcome news for an industry that was heavily impacted by COVID.
Further contributing to increased occupancy is the lack of new inventory coming online. Rising construction costs, increasing interest rates, and a very challenging lending environment for new construction has resulted in very few new senior living construction projects, comparatively speaking.
As we look to the future, it is clear that the demand for senior housing will continue to grow with each passing month. The ability of existing facilities and current new inventory to keep up with demand is limited. Long term, we are facing an undersupplied market with growing demand.
The current environment for new development is challenging; the lead time from conceptualization to occupancy is long. But for seasoned senior living developers, the time to pursue new senior housing opportunities is now!
Between active adult, senior apartments, independent living, assisted living, memory care, short term rehabilitation and long term care, The Douglas Company has been a leader in senior housing construction for more than 45 years. Let us help you make the numbers work!
Director of Business Development
The Douglas CompanyRead More >