Traditionally, half of the nation’s “old folks homes” see under 85% occupancy in their first three years of opening, despite the growing number of seniors who require assisted living programs. Data is only so helpful; it’s a double-edged sword. We need it to figure out what we’re doing, and how we should be doing it, but we also can’t rely on it 100%. Data is often calculated based on a small, diverse portion of the expected impact on the population, but how close can we really get when it comes to data and statistics on senior living occupancy?
It comes down to investors, and what they’re willing to put into a property development. They draw their information off of data analytic companies, which may, or may not be the cause for confusion and upheaval in the senior living center construction market.
“Our industry is tiny,” Kurt Read states. Approximately 18,000 memory care units are currently vacant, and the rest are still under construction, around 11,000. “That’s $3.6 billion of capital that’s getting a zero percent return,” Read continued. “It’s a sobering fact.”
“I’ve heard a lot of theories about why people’s children are above average,” Larry Rouvelas, principal of Falls Church, had to say in response to investors assuming that 95%+ occupancy ratings made their assisted living centers special. “Fifty percent of assisted living properties are at a 95% or above in their third year of lease-up. So you’re not a hero for having done that.” And also, on the subject of capital, had the following to say: “That’s $7.2 billion of idle capital in the industry.”
In Dallas, Texas, there are currently more than 40,000 multifamily units under construction, while the area has only seen 2,000 memory care units constructed in the last five years. The scales are grossly tipped in favor of standard assisted care facilities, while we’re seeing a larger occupancy rating in those units. Just adding a few memory care units to the Dallas area could bring immense benefit to the area.