Senior Housing Development Exceeds Demand
March 12, 2018
Developers have built thousands of senior housing units in many markets, but the glut is outpacing demand and causing the sector to slow, CoStar Group reports. The overbuilding is most prevalent in suburban areas, notes JLL’s Year-End 2017 Senior Housing Investor Survey.
More than 10,000 baby boomers turn 65 each day, and many economists predict that senior housing will be a strong market. While the long-term prospects for the sector are strong, investors are growing concerned the market isn’t there yet.
Developers expanded total senior housing inventory by 3.2 percent compared to the long-term average of 2 percent for the sector, according to Morgan Stanley Research. Several REITs in the sector reportedly are changing operators, slashing dividends, and undertaking strategic reviews, CoStar reports. “As has been widely reported, the senior housing industry has been facing near-term challenges, as new supply and increased competition continue to impact performance,” says Susan Givens, CEO of New Senior Investment Group Inc., a senior housing firm. “These industry dynamics and other factors have exerted negative pressures on our own portfolio.”
Source: “Senior Housing Sector Suffering Effects From Recent Supply Glut,” CoStar Group (March 6, 2018)
Updated: June 21, 2018