Senior living is expected to be the second-most active segment of the multifamily housing area over the next three years, and trends related to older adults will be shaping real estate efforts for years to come, according to the results of the sixth annual U.S. Real Estate Industry Outlook Report by U.S. law firm Akerman LLP.
In March, the company conducted telephone interviews with 179 developers, investors, lenders, owners, appraisers, architects, brokers, consultants and lawyers involved in real estate. Highlights of what the just-released survey found:
- 56 percent of survey respondents rank population aging as a top trend that will have the most significant effect on the real estate market over the next three years.
- 58 percent of real estate executives said they believe that the multifamily sector will continue to lead commercial real estate through the economic recovery. Seven out of 10 agree that apartment development will drive multifamily activity, compared with senior living facilities (17 percent) and condominiums (11 percent).
- One top trend is the “new urbanism,” which finds millennials and baby boomers seeking to live in a compact city center where they can carry out their personal and professional lives. Thirty-four percent of executives believe this changing lifestyle preference will have the most significant effect on U.S. real estate development this year and beyond. A challenge for developers will be finding ways to address the different preferences and needs of both age groups.
- Another top trend is “the longevity dividend,” wherein members of the aging population and their housing preferences and needs create an attractive outlook for senior housing and healthcare real estate sectors. Twenty-six percent of executives believe this trend will have the most impact on real estate development.
Where growth is fastest
In the senior living real estate sector, independent living is growing the most quickly, most likely because it has the fewest regulatory and licensing barriers, the report authors note. Assisted living also is experiencing “significant investment,” they add, noting that assisted living and memory care units also are being added in independent living settings as well.
Potential developers encounter the most regulatory, legal and financing issues in buildings where the greatest levels of care will be provided, such as post-acute care and skilled nursing centers, the authors say. But although it may be difficult for inexperienced developers to secure bank financing for such facilities, they add, experienced developers will find the area stable for the next 10 to 20 years.
Seniors affecting change
Wherever growth occurs, increasingly it is being shaped by the changing preferences and needs of older adults, according to the report authors.
“Senior residents expect more quality services, which are not only influencing where facilities are built, but also how they are built,” the report notes. “The complex needs of patients with physical and memory impairments also are shaping important design principles in real estate.”