Mom and Pops in the Southeast are left in a precarious position by rapid growth.
By Dan Owens, Senior Housing Services
The Southeastern United States have always been a hotspot for seniors housing and care development and operations, mainly due to the large influx of retirees and the parents of young northern corporate transplants in the past few decades. And the pipeline of retirees, mainly from the Northeast and Mid-Atlantic states has not abated.
With the demand for new communities high, there has been a plethora of new developments. New construction has mainly targeted the private-pay markets in metros such as Atlanta, Charlotte, Raleigh-Durham, Charleston, Greensboro/Winston Salem and Greenville/Spartanburg.
New product is coming in the form of freestanding independent living, assisted living, memory care or an unbundled continuum. In several cases, CCRCs in these markets are making huge campus expansion moves as well.
But, in a number of cases, there are new developments and campus expansions in tertiary markets in NC, SC and Georgia.
This leaves some "mom and pop" owner-operators in a precarious position. Their markets may be increasingly competitive and they may face more scrutiny and pressure on facilities and operations.
There has been some upward pressure on seniors housing capitalization rates in North Carolina, South Carolina and Georgia, but this has been offset by the desirability of the regional markets and plenty of money continuing to chase this industry. Relatively low interest rates continue to help fuel development and expansion.
In the past, the Carolinas and Georgia have seen spurts of seniors housing overbuilding. The last four years of development and investment feels different, like a rush to fill pent-up demand and an understanding that the market is beginning to expand exponentially. Also, there is an awareness that the new candidates for independent living and assisted living are demanding more services and amenities than ever.
On the lower end, state reimbursement levels have remained steady and favorable in North Carolina and South Carolina, as opposed to many other states. As a result, more moderate-income seniors housing communities with deferred maintenance and capital expenditure needs may be candidates for renovation projects than in other states.
In all respects, the North Carolina, South Carolina and Georgia markets are stable or growing. The Sunbelt seniors housing and care industry continues to be a national leader.
Dan Owens of Senior Housing Services LLC is a seniors housing broker, site selector and consultant based in Charlotte, N.C.