As you might already know, “The Silver Tsunami” is a metaphor used to describe the expected increase in the senior population in the US. Today 15% of Americans are 65 or older. That number is expected to balloon to over 20% by 2050, bringing an estimated 40 million additional people relying on Medicare, using the healthcare system, and seeking senior living.
This gives us a glimpse into the future of real estate investment, especially in the multifamily sector, since the increase in America’s aging population will have a huge impact on senior living.
Not only will the demand for senior living facilities increase, but the style and manner in which senior living and senior care are delivered will change.
Enter Ground-up Development
Expect to see senior living communities popping up all over the country, most likely from the ground up! As you might know already, ground-up development involves the construction of a building completely from raw materials – which means producing new walls and foundations, footings, etc., in a brand-new location.
These new facilities will not just be in typical retirement states like Florida and Arizona. Many seniors are moving away from these states and halfway back to their home states, even inventing a new retirement term, “halfbacks.” As the demand for senior living increases, senior communities will rise in rural and urban settings alike.
Baby boomers have already started revolutionizing senior living and their expectations will continue to change what it means to age.
Not only will there be more senior living options, but they will look a little different. Today’s baby boomers expect more when it comes to senior living and senior care. They want accessibility and convenience partnered with unmatched care and amenities. The future of senior living is not institutional. It’s vibrant and active, encouraging and empowering – reflecting a generation that has changed their nation.
And that’s what makes this sector perfect for ground-up development! Even though there are many good reasons for investing in a ground-up development project, the most crucial is the fact that these types of projects offer unlimited flexibility. It allows for building customization so that a building can better meet the needs of its purpose. Assuming the building is intended for an assisted living facility, it can offer proper living spaces for the elderly, plenty of space for leisure, and accommodation of certain special needs, all of which can be planned ahead of the construction, but most importantly, expanded and improved upon!
Senior Living Is The Next Best Thing In Multifamily Real Estate
There’s a good reason why we can’t stop talking about why senior housing is the best new investment you can make right now. Senior housing has increasingly drawn the attention of investors for many reasons. Among them are the sector’s strong investment performance returns.
In fact, Senior housing and care is the only commercial real estate asset class that experienced positive asking rent growth during the Great Recession. Rent growth has been steadier, less volatile, and has generally exceeded that of other commercial real estate property types.
The reason for that is actually very simple: Senior housing has a unique resiliency in the commercial real estate market as a result of its dual components of real estate, hospitality, and need-driven services.
What’s better is that investors are excited by the prospects for senior homes. According to a survey conducted in late August 2019 by Marcus & Millichap in collaboration with National Real Estate Investor, 55% of investors consider now the time to buy senior housing assets, trumping all other property types, while 76% of investors in the sector believe the value of the properties in their portfolio will grow 12 months from then.
Another thing to consider is the effects of the pandemic on the housing trends of the population, with more people willing to move closer to relatives or spend the necessary funds to ensure their loved ones have everything they need and are properly taken care of.
All of these reasons make a great case for investing in senior housing of course, but even better, on a ground-up development project for a multifamily complex like an assisted living facility, since it can easily be built upon if it eventually requires expansion due to a need for more tenants, services or space for leisure.
In short, as your business grows more, so can your building. If you invest in Senior Living now, you will be prepared for the silver tsunami when it comes, providing proper living spaces for those who need it while building enough wealth to live your retirement years in peace instead of trading your time for money
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