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July 2017 — Health Care Properties Quarterly — Page 21
Senior Housing & Care
A as one of the top states for
both retirement readiness and
senior happiness, making it
the second-most attractive state for
retirement in the country.This enthu-
siasm for our colorful state is shared
by institutional investors and senior
living operators looking to capture the
demand for this market.
These factors, combined with our
steadily growing population of people
living beyond age 85 (projected to triple
from 7.3 million to 21 million by 2050),
are keeping the senior living industry in
motion. In Colorado, the State Demog-
raphy Office projects that by 2030, Colo-
rado's 65-and-older population will be
77 percent larger than it was in 2015,
growing from 719,000 to 1.27 million.
Colorado has been one of the nation’s
top markets for future growth of senior
housing.
As the economy rebounded from the
2008 collapse and baby boomers began
retiring, construction of retirement and
assisted-living housing began to sprout
again. Development teams focused on
building new facilities and expanding
their operations. Recently, though, con-
struction starts nationally have leveled
off, according to data from the National
Investment Center for Seniors Housing
& Care. Our 2017 supply has exceeded
demand and absorption rates have
cooled in this hot market.
Factors contributing to this cool-
ing period are: increased construction
costs (partially due to labor shortages),
traditional banks tightening construc-
tion lending, increased competition,
challenges in adjusting to continuum
of care needs, buyer budgets and buyer
demands.
Amajor factor
for this cooling
period is the increas-
ing demands and
expectations from
residents, families
and regulatory bod-
ies. Operators are
researching ways to
adjust to the chang-
ing demands of the
baby boomers that
will transition into
senior living in the
coming decades,
while balancing
the implications of
a new administra-
tion on the health
care landscape.These factors present
challenging opportunities. In the past,
assisted living was an attractive option
for banks as it is tied to health care
and the perception that users can’t
defer the decision to move into such
a facility. But now, the impending cuts
to Medicaid and Medicare are casting
doubt on the future user’s ability to
afford that level of care.
Another contributing factor to the
cooling period is the ability of buyers
to afford senior housing options.Those
most exposed to the housing short-
fall are those who grew up assuming
that the pension system their parents
enjoyed – generous income, retirement
in their mid-60s – was the norm.The
reality is most now presume they will
work until their 70s and will receive
limited support from the state.
According to a study published by
Ryan Cooper in August 2016, less than
half of families have any sort of retire-
ment account, and the percentage has
actually fallen by 4 points since 2001.
The average account size has barely
budged since 2000.The percentage
of employers offering such accounts
fell from 61 to 53 percent from 1999
to 2011.The homeownership rate has
plummeted to the lowest level since
1965. And real median income has
fallen by 7 percent since 1999. Most of
this is the result of the recent Great
Recession.
Based on these market dynamics,
affordable senior housing is expected
to experience the most growth in the
near future. In fact, the report Housing
and Care Facility Needs Forecast, Gaps
and Opportunities published in August
2016 byThe Highland Group states,
“Overall, the existing housing inventory
in most Colorado communities is large-
ly based on past housing needs, when
there was a greater proportion of fami-
lies with children, and a lower propor-
tion of older households.The existing
housing inventory across the state will
increasingly be a mismatch with the
age and income mix of the population,
not only due to the aging of the popu-
lation.There is now and will be a grow-
ing need for a greater proportion of
rental housing suitable for age 50-plus;
more urban/walkable housing and less
suburban/car-dependent; more multi-
family/shared housing; more housing
suitable for multigenerational families;
more affordable housing; and more
physically accessible housing.”
While Colorado has a long road to
addressing the future needs of seniors,
our 300-plus days of sunshine, abun-
dance of cultural activities and walk-
ability in urban areas are draws to this
aging population. Americans’ priorities
for selecting a retirement location are
weighted heavily toward cost of living
and health care. Colorado ranks rela-
tively high on both. So, while Colorado
does not offer as warm of a climate for
seniors as Florida or Arizona, our great
state offers lifestyles which translate
into healthy aging, and that can’t be
replicated by those traditional retire-
ment areas.s
Shawn
Donohoe
Business
development,
Catamount
Constructors Inc.,
Denver
Operators are researching ways to adjust
to the changing demands of the baby
boomers that will transition into senior living
in the coming decades, while balancing the
implications of a new administration on the
health care landscape.