Senior Housing Execs See Light At End Of Dark Pandemic Tunnel
A slew of coronavirus-related deaths at U.S. nursing homes last year disrupted the senior housing development space for a short period of time.
For developers and investors in the segment, it was a 180-degree flip from the high times the industry was in before the pandemic took the lives of hundreds of thousands of U.S. seniors.
Even today, senior housing is trying to regain its foothold in the midst of rising construction costs, inflating healthcare staffing expenses and its potential residents' fear of being stuck in large group settings when illnesses erupt.
"Thirteen months ago, the industry was fighting for its life," Capitol Seniors Housing founder and Managing Partner Scott Stewart said while speaking at Bisnow's Dallas Senior Housing Update webinar this week.
"The whole model was called into question, and we had front page above the fold headlines about the horrors that were happening in quote-unquote senior housing, which was painted with a really broad brush to include everything from active adult all the way to skilled nursing, which in our business we don't really consider senior housing. It's long-term care."
Stewart said reports of New York Gov. Andrew Cuomo's alleged mishandling of nursing home patients during the pandemic didn't help the perception of danger in the industry and resulted in at least a temporary loss of residents and investment and development momentum.
Even still, Stewart saw many segments of senior housing perform well without much fanfare in 2020.
"What happened at that time was remarkable I think in how the industry pulled together," Stewart said. "The professionals that worked and who showed up in our communities every day knew their way around flu season and so with that, they didn't have to be told by the [World Health Organization], the [Centers for Disease Control and Prevention] or even the state governments what to do. They went into action and saved a countless number of lives I think by springing into action."
The question for senior housing developers and investors now is where to go from here. America's aging population suggests senior housing product will make a strong comeback when coronavirus fears die down.
"I think the silver tsunami is still coming, [but] I think Covid certainly paused it," Juliette Fowler Communities CEO and President Nicole Gann said. "At our campus, across the continuum, where we saw the pause, it was probably more prevalent in our independent living environment. Because the reality is if you still need skilled nursing, assisted living or memory care, you still need that and still have to find a way to make that happen."
As to where the development of assets went in the past year, Colliers Vice President Elena Bakina said like all housing types, there was a definite preference for suburban sites and facilities that cost less to run in terms of staffing and operational requirements.
"If you look at current development, it's going more towards the suburbs, but the investors are looking in urban and suburban communities," Bakina said.
Investment volumes have dropped during the pandemic, but Bakina said she's optimistic it will rebound and lead to more sales volume toward the end of the year. She said she still sees healthy investor interest for assisted living, independent living or active adult communities. Purchase volumes for skilled nursing, on the other hand, are significantly depressed, with some geographic areas seeing volumes down as much as 30%, according to Bakina.
The good news for senior housing is the pandemic taught quality providers and residents what these facilities can do for seniors. Among the big benefits is having someone there to help with technology when making orders or available to help a senior navigate life when many outside facilities are closed and family members cannot visit.
"We have seen the deterioration of older Americans' health because of that isolation," Gann said. "We have been able to leverage the advantage of being in a facility such as ours. You realize being part of a community would have been a good opportunity because some of those things would have been handled for me."