According to a CBRE expert, the senior housing industry is transitioning from a real estate industry with a business component to a business-focused industry with a real estate component.
Zach Bowyer, MAI, the National Practice Leader for CBRE’s seniors housing & healthcare specialty practice, said in a statement that “seniors housing is different from most other real estate types because the value is largely contingent on operations. Still, lenders and investors are typically most interested in the real estate when deciding whether or not to provide capital.”
The seniors housing sector finished 2015 with 514 institutional transactions closed and $18.7 billion in institutional sales. Last year was a banner year for the sector, which also experienced record high per-unit pricing and record low capitalization rates.
With seniors housing cap rates averaging at a spread of 518 basis points (bps) to the 10-year Treasury, and with returns reported at 16.3%, 14.8%, and 13.3% over a one-, five- and 10-year period, investors are looking to get into the game. CBRE said that 58% of respondents to the CBRE Seniors Housing Investor Survey & Market Outlook indicated that they were looking to increase their exposure in the market.
“The seniors housing landscape is evolving with the increased presence of sophisticated capital, market transparency, operational efficiencies and technological advances. This can be compared to the institutionalization that the multifamily sector experienced from the mid-1990s to early 2000s,” Bowyer said. “As the seniors housing industry evolves, it is imperative that our valuation methodologies, access to accurate information and understanding of our clients’ needs continue to evolve in step.”
Related Stories
Giants 400 | Aug 30, 2021
2021 Giants 400 Report: Ranking the largest architecture, engineering, and construction firms in the U.S.
The 2021 Giants 400 Report includes more than 130 rankings across 25 building sectors and specialty categories.
Resiliency | Aug 19, 2021
White paper outlines cost-effective flood protection approaches for building owners
A new white paper from Walter P Moore offers an in-depth review of the flood protection process and proven approaches.
Senior Living Design | Aug 13, 2021
Designing with dignity for senior living, with Mike Rodebaugh, LEO A DALY
In this exclusive interview for HorizonTV, Mike Rodebaugh, AIA, Senior Living Sector Leader with LEO A DALY, describes how his firm applies "hospitality magic tricks" in its senior living communities, using design to lend dignity to residents, staff, and residents' families and social circles.
Multifamily Housing | Jul 11, 2021
Aluminum railing systems offer ‘versatile styling, easy installation’
Trex Aluminum railing systems offer ‘versatile styling, easy installation,' says the manufacturer.
Resiliency | Jun 24, 2021
Oceanographer John Englander talks resiliency and buildings [new on HorizonTV]
New on HorizonTV, oceanographer John Englander discusses his latest book, which warns that, regardless of resilience efforts, sea levels will rise by meters in the coming decades. Adaptation, he says, is the key to future building design and construction.
Digital Twin | May 24, 2021
Digital twin’s value propositions for the built environment, explained
Ernst & Young’s white paper makes its cases for the technology’s myriad benefits.
Senior Living Design | May 19, 2021
Senior living design: Post-COVID trends and innovations
Two senior living design experts discuss the latest trends and innovations in the senior living building sector.
Market Data | Feb 24, 2021
2021 won’t be a growth year for construction spending, says latest JLL forecast
Predicts second-half improvement toward normalization next year.
Giants 400 | Dec 16, 2020
Download a PDF of all 2020 Giants 400 Rankings
This 70-page PDF features AEC firm rankings across 51 building sectors, disciplines, and specialty services.