Senior living occupancy, which faced challenges last year, is showing signs of strong recovery, setting a positive tone for 2024. This upswing is highlighted in a new report from Green Street Advisors.
By the numbers: After a sluggish start in 2023, senior living occupancy recovered to about 85% of its pre-pandemic levels by year-end. Green Street predicts a continued increase in occupancy this year. Market rents, which saw a significant hike in 2023, are expected to stabilize in 2024.
Driving the news: The recovery is fueled by various factors, including demographic shifts, improved affordability, and changing health and lifestyle trends among older adults.
Yes, but: The sector still faces challenges, such as lower supply barriers and high capital expenditure needs. These could impact long-term returns compared to other real estate areas.
Regional trends: Midwest metros have shown particularly strong growth in rent and occupancy.
Biggest players: Key stakeholders in the senior living market include Welltower, Ventas, Diversified Healthcare Trust, Harrison Street, Benchmark Senior Living, and Brookdale Senior Living.
Driving the market: An increasing number of adults over 80, coupled with improved wealth and affordability metrics, are driving demand. Over 40% of seniors can now afford senior housing through income alone, a significant increase since 2013. Wage growth in the senior living sector is starting to stabilize, aligning with broader economic trends towards a ‘soft landing.’
The big picture: Despite a 20-25% decline in property values since late 2021, Green Street remains optimistic about the sector’s investment potential, citing attractive private market returns and promising net operating income growth prospects.
