State of the Senior Housing Industry



3 Key Industry Trends

  • Trending Small

    Over the last decade, the trend towards small environments (16 residents and under) has increased. Smaller environments offer better outcomes than larger facilities, especially for those residents who have memory loss, are a high fall risk, or just need little extra attention. “Operators are considering converting semi-private rooms to private rooms, reinvesting to make units more homelike rather than institutional” – Lois A. Bowers, Senior Editor Mcknight Senior Living.

  • The Myth of Market Saturation

    People that only read national news about senior housing are often asking if senior housing is being overbuilt. We are of the opinion is that although that is the case in certain markets, the general answer is no. One of the reasons Sage Oak is going after a market like Lake Charles is that secondary and tertiary markets are often overlooked by the bigger players, even though our market research confirms that Lake Charles occupancy rates are 7-8% higher than the national average. Therefore, even if senior housing is being overbuilt on a national level, it may not have an impact on markets that are underserved.

    Further, If you read any article about senior housing being overbuilt, Dallas is nearly always listed as one of those cities. So why are our care homes constantly between 95-100% occupancy? The answer is because they solve a real problem in the market place by providing better care, better food and better communication. When you have a unique selling proposition and you aren’t a commodity like the other options, high occupancy rates may likely follow.

    And the experts agree. At the latest Bisnow’s Dallas Senior Living event, Prevarian Senior Living Managing Principal Allen Brown stated that though the market appears overbuilt, a granular analysis will turn up plenty of viable opportunities for senior housing developments. Silverstone Healthcare Company President Tom Dwyer said the demographics all point to great potential in the industry, and developers should focus on spending the extra time and resources necessary to break into high-barrier-to-entry markets like Central Dallas and the Highland Park area. 

    The trend in senior housing is still for-profit luxury product. NorthMarq Capital Vice President of Capital Markets Ruth Davis said she sees a continuation of the trend of developers looking to finance for-profit senior housing product. In terms of the type of for-profit product, Capitol Seniors Housing founder Scott Stewart said it is all about active adult housing. “We see a real volume demographic and strong demand where folks who traditionally just want to stay at home, they now want to move out; they want to be with like-minded folks … and they’re looking for a third act. They’re not ready to mail it in. They’re not ready to retire.”

    Jeremiah Jensen from Bisnow.com: “There is a lot of room in this business for a tremendous amount of growth.”

    In conclusion, this may be a great time to be building assisted living and memory care, especially in a market like Lake Charles.

  • Skilled Nursing is Struggling

    From McKnights Long Term Care News by Erin Shvetzoff Hennessey (1/8/18): “Adapting to the rapidly growing senior population is the first challenge to look for in 2018 and byond. The U.S. senior population continues to rise and new products and companies are entering the senior living market to meet this need. The U.S. Census Bureau projects that by 2020, there will be a senior population of 56 million and by 2030, that number will balloon to 74 million seniors. 

    In the face of this dramatic increase, existing campuses and facilities will need to adapt their services and pricing to remain competitive. Senior living operators will also need to be mindful of two parallel trends affecting the populations entering their facilities: At the same time younger seniors are entering communities, the average resident has become older and frailer than before. Senior living operators will have to care for more complex residents while simultaneously remaining attractive to young, technologically savvy seniors.

    To better accommodate the influx of older, frailer residents, providers will need to move toward the medicalization of senior living. The average age of an assisted living resident has risen to 87 years, according to the Assisted Living Federation of America. Older residents bring unique health challenges such as chronic conditions and increased risks for falls and other issues. To adapt internally, facilities should simplify their pricing structures and ensure residents can access resources to age in place. Senior living operators should also build strong partnerships with external partners ranging from primary care providers to home health and hospice services, to provide wellness and therapy programs on site.

    While senior living demand is growing dramatically, skilled nursing facilities are feeling the squeeze of shorter stays and declining occupancies. Nursing home occupancies continue to decrease as payment changes and new options have encouraged many individuals to skip the nursing home entirely and use alternative services, such as home health. Today’s primary user of SNFs is vulnerable and frail. From 2012 to 2017, nursing home occupancies fell from nearly 86% to less than 82%, according to the National Investment Center for Senior Housing & Care. The financial pressures from value-based and risk-based payment models have also led to reduced lengths of stay at SNFs.”

  • Skilled Nursing is Struggling (continued)

    From McKnights Long Term Care News by Erin Shvetzoff Hennessey (1/8/18):

    “Adapting to the rapidly growing senior population is the first challenge to look for in 2018 and byond. The U.S. senior population continues to rise and new products and companies are entering the senior living market to meet this need. The U.S. Census Bureau projects that by 2020, there will be a senior population of 56 million and by 2030, that number will balloon to 74 million seniors. 

    In the face of this dramatic increase, existing campuses and facilities will need to adapt their services and pricing to remain competitive. Senior living operators will also need to be mindful of two parallel trends affecting the populations entering their facilities: At the same time younger seniors are entering communities, the average resident has become older and frailer than before. Senior living operators will have to care for more complex residents while simultaneously remaining attractive to young, technologically savvy seniors.

    To better accommodate the influx of older, frailer residents, providers will need to move toward the medicalization of senior living. The average age of an assisted living resident has risen to 87 years, according to the Assisted Living Federation of America. Older residents bring unique health challenges such as chronic conditions and increased risks for falls and other issues. To adapt internally, facilities should simplify their pricing structures and ensure residents can access resources to age in place. Senior living operators should also build strong partnerships with external partners ranging from primary care providers to home health and hospice services, to provide wellness and therapy programs on site.

    While senior living demand is growing dramatically, skilled nursing facilities are feeling the squeeze of shorter stays and declining occupancies. Nursing home occupancies continue to decrease as payment changes and new options have encouraged many individuals to skip the nursing home entirely and use alternative services, such as home health. Today’s primary user of SNFs is vulnerable and frail. From 2012 to 2017, nursing home occupancies fell from nearly 86% to less than 82%, according to the National Investment Center for Senior Housing & Care. The financial pressures from value-based and risk-based payment models have also led to reduced lengths of stay at SNFs.”

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