Get ready America for assisted living to be the engine of growthin the seniors housing business over the next three years.That's the takeaway from a newly released survey of more than250 industry professionals by National Real Estate Investor.
Among participants to the e-mail survey conducted in the fall of2008 after the collapse of Lehman Brothers, 47% expect the assistedliving segment to experience the most growth over the next threeyears, followed by independent living (43%), seniors apartments(37%), memory care facilities (27%) and continuing care retirementcommunities (24%).
Only 16% of respondents cite skilled nursing facilities as thebusiness segment that will experience the most growth over the nextthree years.
Survey respondents represent a cross section of disciplines,ranging from commercial real estate builders, owners, developersand managers (42%) to brokers (29%), lenders (9%) and various otherprofessionals. While they are bullish on assisted living,respondents currently are most likely to own, manage, develop orfinance independent living properties.
Despite today's gloomy economic outlook for the near term,more than one in five seniors housing owners and operators expectsthe square footage in their portfolios to increase by at least 25%over the next two years.
Although 30% expect no change, one-third of owners and operatorsanticipate that their portfolios will grow by at least 10% duringthat time.
There is good reason for the owner/operator camp to feel it isin the path of growth. The demographic projections show a clearuptick in the graying of America in the years to come. With thefirst wave of baby boomers just now reaching retirement age, demandfor seniors housing is expected to rise sharply over the next fewdecades.
From their vantage point, lenders in the short term are not asbullish as owners and operators about the prospects for an increasein the seniors housing business. In fact, lenders are evenlydivided: 34% expect an increase in dollars used to finance seniorshousing over the next 24 months, while 34% expect a decrease.
Three out of 10 lenders anticipate that the dollars used tofinance seniors housing projects will decrease by 10% to 24% overthe next two years. But another 30% of the lending communityexpects the amount of debt financing provided to the sector willrise at least 5% over that stretch.
While changing demographics certainly are having a positiveimpact on the seniors housing industry, some negative factors hangover the market like a dark cloud. On a scale of 1 to 5 -with 1 equaling no impact and 5 representing a tremendous impact- respondents conclude that the credit crunch as it relatesto both borrowing and lending warrants a 3.9 rating.
Nipping at the heels of demographics on the impact scale are thesoft residential housing market and the weak economy. Both, saysurvey respondents, merit an impact rating of 3.6.
