The seniors housing sector is slowly recovering, and rents for both housing and nursing care rose between 2.0%–2.4% in 2021, per NIC MAP data. Absorption turned sharply positive in the second half of the year, aiding occupancies, which are more than 80% in independent living facilities and in the upper-70% range for assisted living and nursing care, though still below pre-pandemic levels. The release of $25.5 billion of COVID-19 relief funds by the Department of Health and Human Services has gone a long way toward shoring up previously challenged balance sheets.

Two of the most important trends in the sector today surround staffing and the shuffling of ownership. A recent survey by OnShift noted that 80% of respondents said burnout is at critical levels, and 75% had difficulty staffing work shifts. Meanwhile, third-party vendors help manage expenses by providing services in independent and assisted living facilities, keeping residents out of skilled nursing homes. These less-regulated facilities also require less skilled labor than skilled nursing homes.

Overall investment sales volumes approached $19 billion in 2021, the strongest year since 2015. To combat the challenges of staffing, the biggest owners are growing and diversifying their presence. Healthpeak Properties has sold its seniors housing operating portfolio, pivoting to life science and medical office. Meanwhile, Welltower, Ventas, and Harrison Street have acquired property worth a combined $6 billion in the past 24 months. New investors in seniors housing are finding it challenging to scale up. Larger investments are required for a regional portfolio, while piecing together assets one-by-one from scratch would be time consuming and laborious in this environment. Economies of scale can help with staff shortages, sales and marketing expenses, and management overhead.

The upcoming 12 months look to offer more signs of recovery. Lower construction levels as wages and supply prices rapidly increase will aid existing occupancy. Operators hope for more robust rent growth this year, with rate increases and cutbacks on concessions.

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