It's Time to Talk About Senior Housing

Bennett Johnson moderated the InterFace Seniors Housing West roundtable.

LOS ANGELES—Senior housing is becoming a robust niche in the multifamily market. InterFace Seniors Housing West held its second annual roundtable to discuss the state of the market. Bennett Johnson, VP and a practice leader for the seniors housing & care specialty group at CBRE valuation and advisory services moderated the panel, which included speakers Justin Hutchens of HCP; Patricia Will of Belmont Senior Living; Jeff Sands, HJ Sims; Aaron Koelsch of Koelsch Senior Communities; and Peter Martin of JMP Securities.

Johnson opened the discussion by asking the speakers to give a snapshot of the market. Overall, the panelists were cautiously optimistic or even cautiously concerned. “It wasn’t a rosy picture, but at the same time, nobody seemed too concerned,” Johnson tells GlobeSt.com. “We are entering into a period here where we are going to have some challenges and it is timing to scale down and really understanding the different aspects of operations and the market to make sure that your project is successful.” While there may be some slowing in the year ahead, developers on the panel were still optimistic that they would get project done, particularly Will of Belmont Senior Living, who said that she thinks her portfolio will continue to perform well. “Senior housing, even more so than other sectors is a localized market, and the results that we see even within a metro area are going to vary,” adds Johnson. “The one real take away that got hit over and over was that success is really going to be dictated by your operator, and if they are experienced enough to get through market challenges. The ones who are not experienced are the ones that have a little more struggle ahead of them.” Like the rest of multifamily, there is plenty of capital chasing deals in the market, so much that some of the panelists were concerned that there was too much capital. “There is a little too much capital coming into the industry and a lot of new capital coming into the industry that is not as up to speed on what to look for or doesn’t understand a lot of the nuances,” says Johnson. “There is some concern that some lenders are taking on riskier opportunities, while some panelists felt that may be a good thing because it will create more opportunities.” One of the major challenges all of the panelists noted was finding qualified staff within the current wage limitations. For example, staff might prefer to work at Starbucks, where wages are similar. According to Johnson, we are hitting a time where the economy is more robust, and there are more opportunities for low skilled jobs. “Staffing challenges is something that the industry is focusing on a lot,” he says. “We are seeing wage pressure for low skill jobs and finding talent for key management roles. Staffing is definitely an issue, and how that is going to impact the bottom line.”