Seniors Housing
& Care Investor
Survey and
Trends Outlook
- Spring 2020

In a sector already poised for disruption, new innovations such as technology, infrastructure and design are vital to the well-being and safety of residents. 

The COVID-19 pandemic continues to impact the real estate industry in new ways. Owners and operators in the Seniors Housing sector are facing unprecedented challenges head-on, and have adjusted to apply learned best practices that ensure the health and well-being of their residents.

Key themes from survey respondents:

• With little transactional data and short-term volatility of cashflows, investors are more often relying on the discounted cashflow analysis. The greatest unknown when modeling cashflows is the re-absorption rate. Opinions range from a prolonged recovery due to acuity creep and consumer fear to accelerated recovery with pent-up demand. 
• Investor sentiment jumped from 72% of respondents expecting no change in seniors housing capitalization rates, to 83% expecting an increase as a result of COVID-19.
• Investors are gravitating back to the more need driven or traditional seniors housing component, after the emergence of active adult.

Key trends from the report:

• The first quarter of 2020 saw the highest transaction volume since Q1 2016 while capitalization rates dropped to an all-time low. 
• Declining occupancy is having the greatest impact on revenue. With some market segments being more impacted than others , it has been challenging to state a baseline.
• Increased operating expenses for both short-term and long-term needs has had the greatest impact on valuations. 
• Operators are expecting stabilized operating expenses to normalize at 20 to 50 percent of the current COVID-19 premiums.
• Medium and long-term investment sentiment is still strong as experts prepare for the “silver tsunami,” with the leading-edge baby boomer now within a ten-year investment cycle of occupancy.
• We are seeing an acceleration of existing trends and innovations and the emergence of new innovations, such as technology, infrastructure and design.
• Buildings across the United States are applying new safety guidelines and protocols to ensure the long-term safety of staff and residents.

*Our commitment to business continuity during this unprecedented time, in addition to our willingness to remind the market of the long-term opportunity for the Seniors Housing & Care sector drove our decision to release this report. We are here to help you navigate (re)entry to prepare your workplace, your asset(s) and your people for the next normal in a COVID-19 world. View more JLL COVID-19 resources for real estate.