The senior living industry may be one of the hardest hit by the coronavirus pandemic, yet with operators well suited to manage infectious diseases, and the strength of the seniors housing market before the virus, the industry has continued to maintain operations despite numerous COVID-19 challenges, according to a report released last week by Marcus & Millichap.
Independent living communities may be the least exposed to disruption, the authors said, because their residents tend to be younger and require less help. Overbuilding continues to be a concern for this sector, however, and likely will lead to delays on many construction projects until next year.
Assisted living environments have suffered several coronavirus outbreaks, increasing costs for labor and supplies, the report noted. Construction delays, however, could keep occupancies high and demand strong for existing communities.
Memory care communities face challenges in keeping residents safe from COVID-19 but may be best positioned to withstand an economic downturn, due to the specialized care they offer, according to the report. In the near term, however, occupancy could decline as the pace of tours and move-ins slows.
Skilled nursing facilities have experienced increasing infections and shortages of personal protective equipment, as well as the challenge of housing residents and patients who need around-the-clock medical care. Greater equipment and infrastructure, however, are helping skilled nursing stay better prepared during the COVID-19 pandemic than other senior housing and care types. The report authors said they believe nursing homes will see higher occupancy near term.
In the end, the authors note, strong investor sentiment likely will help the sector survive pandemic-related challenges.
“Sales volume over the previous 12-month period was up 18 percent from the prior stretch, lifted by healthy investor perceptions and attractive acquisition targets,” the report said. “REITs are eyeing new construction as large portfolio deals have slowed in the market, while private buyers now comprise a greater share of deal flow.”
