A new study has been released suggesting the nation's population of senior
citizens - people in the 75-plus age range - is slowly but surely
outstripping the building industry's ability to house them.
Investment Brokerage firm, in 1997 some 45,000 new senior housing units were
added in the United States, and in 1998 about 50,000 were built. In 1999
about 65,000 senior units were added.
"Combined, these three years of strong development increased the senior
housing inventory by approximately 7.9 percent," the report said, but, "the
national senior population grew at a rate of 8.5 percent during the same
time."
Adding more concern, said the Marcus & Millichap report, are indications that
new construction will slow beginning next year, largely due to expected
increases in interest rates.
Alternatively, the report notes that rents have tended to remain stable due
to increasing competition to fill units.
In 1998, average rents at independent units of congregate care facilities
were $1,357 per month, assisted living units averaged $1,839 per month and
independent units within continuing care retirement communities renting for
an average of $1,105 per month.
Through 1999, the report said, rents have had little movement.
Senior housing properties, particularly in major metropolitan centers, the
report said, have experienced sharp increases in competition which has forced
them to not only remain competitive in pricing, but also to focus more
sharply on providing the highest quality service to residents.
Because of the competition, Marcus and Millichap predict rents will continue
to be stable and even more services will be added.
Again this year, California, Florida and Texas will lead the nation in
construction of new seniors dwellings, with California added 6,662 units;
Florida, 5,196 units; and Texas, 4,310 units. The brokerage company said,
however, those states will add seniors fast enough that those units will be
quickly used.
In the next five years, the 75 year and older population is expected to
increase by 13.7 percent - roughly 2 million people. The report speculates
that during the next five years senior incomes will rise by about 14.5
percent to a national average of $20,232.
With the exception of nursing facilities, senior housing vacancy remains
tight at an overall average of 5 percent. Assisted living facilities,
impacted by the completion of 86,400 new units in the last three years, have
experienced a 5 percent increase in vacancy since 1995 to 8 percent in 1998.
As development begins to slow during the next year and more states allow
these facilities to accept Medicaid patients, the trend should reverse with
vacancies moving back toward 6 percent.
Published: October 11, 1999
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