“Recession-Resistant” Senior Living Sector

 

The U.S. has long been anticipating what some have dubbed the “Silver Tsunami,” a surge in the population of those aged 65 and older. It’s estimated that about 10,000 Baby Boomers turn 65 each day, a fact that has led to overbuilding in the senior housing sector, which according to a recent Marcus & Millichap report, is starting to even out.

A longtime veteran of the industry, Gamzon has seen the sector thrive throughout several economic headwinds, including the Great Recession. The continued demand and need for the product, he says, is what makes senior housing one of the safest bets for investors.

“Do not panic,” he said. “This is a recession resistant real estate sector that has survived and has prospered as recently as the great recession of 2009.”

Gamzon pointed to four factors that will keep the industry strong through this uncertain time: an abundance of capital, favorable demographics, innovative development models and strategic alliance opportunities.

“If I were to give a message to the development, the multifamily sector, I would say do not slow down your plans, just be aware that we’re in an evolving environment but all steps are being taken,” he said.

“There’s no panic and we anticipate no panic,” said Gamzon of the industry. “Who is panicking are investors in the publicly-traded companies in this industry.”

While he sees the overall fundamentals of the industry as solid and in better shape at the moment in terms of occupancy than in the last three years, immediate impacts to the segment will be felt in the form of a slowdown in fill rates and potentially some loss of occupancy. Gamzon also expects M&A activity to intensify in the near term.

According to a new survey taken by Great Place to Work, 79 percent of senior housing operators experienced no major change in move-outs last week and no significant changes in occupancy. In fact, 21 percent of operators reported increased occupancy at their properties. The survey was conducted with operators representing 1,078 properties and 100,899 units.

“The data reflect how quickly senior housing operators have adapted lessons learned in Washington state to protect our nation’s vulnerable elders and frontline staff by upholding the highest standards of care,” said Robert Kramer, Founder & Strategic Advisor at the National Investment Center for Seniors Housing and Care, in prepared remarks.

The senior housing sector continues to be a winner. Recent data from the National Investment Center for Seniors Housing shows that in 2019, despite a slight drop in total transaction volume to $14.1 billion, the sector still generated returns bested only by the red-hot industrial sector.

Click or type this link to get the 2020 Senior Housing Outlook Report: 
https://cdn2.hubspot.net/hubfs/440119/SHN-Hunt-2020-Outlook-Survey-01-31-2020.pdf
Senior Housing Outlook Report 2020 SHN-Hunt-Outlook-Survey-

Demetrius Brown, Income Property Solution, Commercial Real Estate Investor

 

“Here at Income Property Solution we buy commercial real estate in Emerging Markets. They produce
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Stay safe out there!

Demetrius Brown, & Team

IncomePropertySolution.com

 

 

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