ATLANTA, GA (June 4, 2012) – After a resilient performance during the recession and with the Baby Boomer generation approaching retirement, the seniors housing market has become anever-more appealing destination for commercial real estate investment dollars.
That was the view of show host Michael Bull (top right photo) and his guests in the most recent episode of “America’s Commercial Real Estate Show,” which provided an enlightening look at the seniors housing sector.
“It seems to have been a stable sector through this recession when you compare it to office, retail and industrial,” said Bull, the president and founder of Bull Realty.
As a result, “you’re seeing a lot more investors and institutions look at seniors housing than you had five years ago,” noted Andy Isakson (top left photo), managing partner of Isakson Living.
The sector’s properties have a current value of approximately $270 billion, according to Chris Kazantis (middle right photo), a director with AEW Capital Management. “That’s about 80 percent the size of [the hotel sector] and less than a third the size of multifamily,” he said. “But it’s a sector that’s growing tremendously.
Cap rates in the seniors housing market vary widely, Kazantis added. “But in general, well-located, well-run properties right now are probably trading in the high 6, low 7 percent range,” he said.
Part of the reason for the optimism about the sector’s future performance is that the first wave of the 75 million Baby Boomers are entering their retirement years. But while the trend means an ever-expanding pool of seniors housing residents, it will present challenges for facility operators, guests said.
“Right now, we’re dealing with the World War II generation,” said Richard A. Thomas (middle left photo), senior vice president of Grandbridge Real Estate Capital. “Tomorrow, we’ll be dealing with the Sixties generation. I think what my grandmother and my great-grandmother are demanding today will be very different than what my mother and what I will demand.”
he show also touched on seniors housing development, and Glen Haddock (lower right photo), CEO of Haddock & Associates, said landowners looking to build seniors housing facilities must start off by doing a market analysis.
“We have so many realtors that call I and say, ‘I’ve got this great piece of land’ … and their familiarity with the seniors market really isn’t there,” he said. “They need to take the time to run a feasibility analysis.”
The next “Commercial Real Estate Show” will be available June 7 and will examine tax credits available for businesses and real estate endeavors.
Contact
Stephen Ursery
Wilbert News Strategies
404.965.5026
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