Recent data from the National Investment Center for Seniors Housing and Care (NIC) suggests that the senior living industry may face a significant shortfall in the coming years. By 2025, the industry could require over 200,000 new units, but current construction rates are not keeping pace with this projected demand. The impending gap between new development and demand is highlighted by the first Baby Boomers turning 80 in 2025.
NIC’s Lisa McCracken emphasizes the need for $400 billion in new investment by 2030 to keep up with demand, but current rates indicate that only 40% of this goal is on track. Factors such as the lengthening development cycle and unfavorable interest rates have contributed to a record low in new development starts.
While the industry faces challenges, the need for significant near-term growth in new inventory is essential to maintain current market penetration. The article forecasts a potential shortfall in investment, which could lead to increased occupancy within existing portfolios but hinder future market penetration.
With residents living longer, healthier lives, the industry must provide expanded wellness and lifestyle options for an evolving and more-engaged population. However, even with rapid construction increases, there may still be a struggle to keep up with impending demand due to the lengthy timeline of most projects.
This could result in a lack of available and affordable senior living options, leading older adults to compromise on either quality or location of their future residence. McCracken warns that this could lead to a significant gap between the pace of housing development and the growing 80+ age group.
As the industry remains optimistic about demand, there is a sense of urgency to address the current construction rates and mitigate the challenges hindering new development. The need for new investment and construction to keep pace with demand is crucial for the senior living industry’s future.
