Me Generation Defines Seniors Housing

By 2030, a quarter of the population will be baby boomers and this "me generation" won't accept the traditional nursing home facility. They're going to look for home-based community services or active-living retirement communities. (No more bingo and shuffleboard; bring your grandparents an Xbox One.)

Marcus & Millichap national seniors housing group investments VP Doug O'Toole tells us that seniors housing properties weren't even considered an asset class a few years back by most investors. But, in the next six years, seniors 75 and older are projected to reach 23 million. (Sounds like a good time to get into the buffet business.) That's an 18% increase from today; even more astounding is the wave of boomers that will follow. By 2030, boomers will make up 25% of the population. In Texas alone, the 60 and older population will increase 50% by 2040.

There's a growing demand for more assisted living and dementia facilities than ever before. The dementia need is expected to grow 50-fold in the next 30 years. The greatest generation (85 and older) needs the care, but the real emergence will be the baby boomers. They'll be demanding of certain types of health facilities and care and the traditional nursing home just won't cut it. Doug says that population will demand better care in better more proficient facilities in a home care environment. What he anticipates are seniors staying home longer or moving into facilities that won't mirror the nursing home concept.

Doug (here with his two sons; he has four daughters, too) and his seniors housing team have several skilled-nursing and assisted-living facilities listed; he tells us it's a seller's market and they wish they had more product. There's huge demand, the money is available, and interest rates are low. Seniors housing projects, on average, get higher returns than traditional multifamily, Doug says. Seniors and healthcare properties may be more management intensive, but the payoff can be huge. (There's new potential tenants every day, thanks to Father Time.) It is not an asset for the faint of heart, but when done right, the long-term gains can be significant, he says. Well-run properties earn high-end returns; and the need is definitely there, but supply is constrained because construction is behind the curve.