HOUSTON – (By Dale King, Realty News Report) – Like virtually all business endeavors that took place during 2020, the seniors housing and care industry in Texas and around the US has endured the devastating impact of COVID-19. Skilled nursing facilities were harder hit than seniors housing communities, but they are expected to recover quickly due to demand, says the Mid-Year 2020 Texas Research & Forecast Report on seniors housing and care prepared by Colliers International.
Even operators of seniors housing communities and skilled nursing facilities that did not take a direct hit from the pandemic “had to deal with isolation, safety, staffing, increased operating expenses and many other issues” related to the pandemic.
“Despite all these challenges, the industry fundamentals in the US and Texas remain positive in the long term,” says the report by Colliers International Houston. Texas seniors housing is still a sound investment amid Covid-19, Colliers reports.
Patricia Will, the founder and longtime operator of a Houston-based senior housing facilities organization which has grown to 24 locations nationwide, agrees with the report’s conclusion that better times ahead, along with a measure of normalcy, will pump up the industry.
“We have to look at issues that are broader than just one year,” said Will, founder and CEO of Belmont Village, which develops and operates care centers in Texas and elsewhere.
She acknowledges a current lull in the market, mainly the result of shutdowns required to stay safe from coronavirus. “The demand is there – and we have the wind in our sails,” she said. “Momentarily – like now – many centers are closed to new move-ins. We are seeing a decline in occupancy, but it will come back. Demand is coming back and is very robust.”
The massive Baby Boomer generation is aging – a huge demographic lump in the pipeline. The youngest Boomers are 56 years-old. The oldest Boomers will turn 80 in about five years.
Loneliness – or Lack of Socialization
Loneliness – or lack of socialization – is a major factor in the senior housing market. It is not always the result of COVID-19, but the stay-inside orders that are part of the coronavirus fight force elders to remain room-bound – which isn’t good.
Actually, said Will, loneliness spurs people who live alone in their homes to seek housing at senior communities. “We are a good six or seven months into the pandemic, and people are realizing that managing at home on their own is very hard.”
Technology such as WiFi and the internet has helped seniors to beat loneliness. “Extra steps taken by the operators of seniors housing has made them feel safe and cared for, preventing increased move-outs,” said the Colliers report. It adds that WiFi usage among seniors housing residents has risen 20 to 25 percent.
The Colliers report cites other non-COVID issues: “Increases in operating costs started long before the pandemic and will continue after it. Labor shortages resulting from the pandemic will go away, but the challenge of hiring qualified staff will continue to be one of the major issues for operators.”
“Despite all these challenges, the industry fundamentals in the US and Texas remain positive in the long term. Prior recessions have shown that, because of its needs-based nature, seniors housing is better equipped than other sectors to handle economic turmoil.”
There are still COVID-related potholes to deal with. The National Investment Center for Seniors Housing and Care (NIC) reported a decrease in the number of units absorbed in primary US markets during the first half of 2020.
NIC also reported a decrease in the number of units absorbed in Texas during the first six months this year — negative absorption of 1,605 units.
The highest demand on an annual basis was in the Houston metro where 285 units were absorbed, followed by Dallas (145 units). In contrast, both Austin and San Antonio recorded negative net absorption over the year of 30 and 320 units, respectively.
In Houston, inventory grew by 574 units and in Dallas by 155 units. Austin and San Antonio both recorded negative growth in the first half of 2020, shrinking by -114 units by -36 units, respectively.
Major metros in Texas reported seniors housing occupancy rates decreased during the first half of 2020. All the major markets recorded a decrease in occupancy between Q4 2019 and Q2 2020.
Houston had 2,473 units under construction in Q2 2020, the third highest number in the US. Dallas’s construction volume (2,138 units) is fifth in the country.
Senior population growth and an abundance of debt capital spur these new developments.
Oct. 12, 2020 Realty News Report Copyright 2020.
File: Seniors Housing and the Pandemic
File: 2 – Colliers International. Belmont Village. Mid-year 2020 Texas Research & Forecast Report. Covid-19. Seniors Housing and the Pandemic. Elena Bakina