My mother was a great believer in that saying about bad news coming in threes. Perhaps justifiably so. Time and time again, her warnings played out.
But maybe good things can also happen in threes. Recent developments in the senior living sector suggest there’s some truth to that notion as well.
Let’s start with the most recent event: the National Investment Center for Seniors Housing & Care’s Fall Conference.
What was good about the show? Pretty much everything. This year, both operators and investors seemed to have a noticeable spring in their steps. Communities are seeing more heads in beds, profits are trending in the right direction, and the much-anticipated “silver wave” of older adults seeking better living arrangements than staying at home keeps inching closer.
On top of that, the Federal Reserve just cut lending rates by half a percentage point, signaling that there may be more cuts ahead. If the business of NIC is deal making, it’s safe to say business was booming this year.
The second piece of good news comes from Walker & Dunlop’s recently released 2024 Seniors Housing Outlook, which paints an encouraging picture of growth and opportunity in the senior living sector. The report highlights the immense potential driven by demographics: by 2050, 25% of Americans will be 65 or older, compared with 17% in 2020.
Despite rising costs and regulatory challenges, the report notes that the industry is “ripe with possibilities in innovation, particularly in technology adoption and new service offerings.” Rent growth has helped operators offset increasing costs, and more financing is becoming available for acquisitions and developments, signaling growing confidence.
As for the third reason to be happy? A new report from Cushman & Wakefield reveals that long-term care fundamentals strengthened in the first half of 2024. According to the report, 56% of investors expect little to no change in capitalization rates over the next 12 months, signaling stability in the market. Although concerns about debt market liquidity remain, transaction volumes soared by nearly 65% in the second quarter alone, reaching $1.43 billion. Investors are honing in on core-plus and opportunistic investment strategies, positioning the sector for continued growth.
After years of uphill battles, these three developments signal that the tide is turning.
I believe the French have a term that nicely responds to what we’re seeing: Tres bien!
John O’Connor is editorial director for McKnight’s Senior Living and its sister media brands, McKnight’s Long-Term Care News, which focuses on skilled nursing, and McKnight’s Home Care. Read more of his columns here.
