Question of the Month: Storylines for 2020

What will be the biggest storyline in 2020?

Is this our rebound year?

By Aron Will

Vice Chairman, National Senior Housing

CBRE Capital Markets

With construction waning and the culling of many non-strategic assets having taken place over the past two years, will 2020 truly be the rebound year that many are anticipating? Or will labor pressures and an underestimation of development velocity continue to push this rebound out to 2021 or 2022? 

This remains to be seen, but would be warmly received by equity analysts and industry investors alike, positioning seniors housing for sustained growth even with a downturn in the wider economy.

 

And the winner is…

By Alan Plush

CEO/Partner

HealthTrust Inc.

The impact of both tight labor markets and excessive new development will result in a two-market industry: winners versus losers. 

Performance will suffer at properties that are poorly managed or new to overbuilt markets, while those that have some protections from new competition and are well managed likely will continue to perform well. We will see cap rate and operating margin (thus value) segregation between assets, and it will become clear who the winners and losers are. 

Abnormally low interest rates can cover some of this up, but at some point there will be a sorting out.

 

Active adult offensive begins

By Lawrence Brin

Managing Director – Real Estate 

MidCap Financial Services

In 2020 we will get some answers regarding the mythical active adult asset class. In 2019, it was a hot topic of discussion — many had heard stories about it, some had even seen it firsthand. 

It is definitely coming in an inexorable march, but what exactly is it? Age-restricted housing under a different guise? Or a gateway product for independent living? Perhaps the first stage in the evolution of seniors housing that captures the baby boom generation?

Now that it has established a beachhead, we will soon learn more about its viability.

 

Affordability is a challenge

By Scott Thurman

Chief Credit Officer

Greystone

The biggest seniors housing storyline for 2020 has been building for quite some time — the growing need to address the cost disparity in care, and how the industry will respond to the demand for a more affordable seniors housing product. 

We hope to see more providers designing facilities and services that cater to the middle market, and we also expect more “aging in place” strategies to be a part of this trend.

 

Here come the boomers

By Ben Firestone

Executive Managing Director

Blueprint

OK, boomers. We will see the industry take actionable steps as the surge in demand from the baby boomer generation becomes real. Our outlook for 2020 is strong, and it remains an exciting time to invest in opportunities in the space.

 

WSJ got it wrong

By David Schless

President

American Seniors Housing Association

A recent Wall Street Journal article suggests that seniors housing may not have a particularly bright future. And while developers and operators will have to produce well-
conceived communities to find success in the future, a forthcoming, research-based analysis will challenge the WSJ’s statements. 

It will demonstrate convincingly that the expected population growth of older adults in the largest MSAs will result in the need for a substantial increase in new seniors housing production between 2025 and 2030. 

This article should be a major storyline for 2020 and a must-read for professionals as they plan for the impending age wave.