Widmier: By 2029, the 65-plus age group will account for more than 20% of the total US population. Other demographic factors will exponentially increase demand beyond just the Baby-Boomer wave, including an increasing life expectancy. Now, one out of every four 65-year-olds will live to be 90 years old, with one in of every 10 expected to live past 95 years of age. In addition, we are seeing an increasing acceptance rate. An increasing percentage of the senior population is becoming more educated about the benefits of living in senior housing and have the financial capacity to take advantage of the numerous service options available to them. A mere 1% rise in the penetration rate would result in a correlating required senior-housing supply increase of 16.2%.

GlobeSt.com: How does development come into play currently in the sector?

Widmier: With a 2016 year-over-year growth rate of 2.6%, inventory growth is below the 30-year average annual growth rate of 4%. Despite concerns of overbuilding, new construction is concentrated in the 10 biggest metro areas. Both construction as a percentage of inventory and average occupancies for each of these metros generally indicate healthy organic growth rather than oversupply. Construction as a percentage of inventory stands at only 3.8% for the majority of independent-living communities and at 7.6% for the majority of assisted-living communities. Considering both future population-demand indicators and the age of the current inventory, these figures are relatively modest. The US 75-plus population is estimated to increase by 16.2% over the next five years. If only a portion of this figure translates into actual prospective residents, the senior-housing industry is facing a severe shortage of inventory.

GlobeSt.com: What else should our readers know about senior-housing investment?

Widmier: The senior-housing industry has proven itself to be not only a defensive investment during an economic downturn, but it has also produced real estate industry-leading returns during periods of economic upswings. The seven-year total return on investment for senior housing is 13.25%, and the index for the prior four quarters stands at 11.7%. These returns are considerably higher than those of other major real estate property types.

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SAN DIEGO—The senior population is becoming more educated about the benefits of senior housing and has the financial capacity to do it—even before the bulk of Baby Boomers turn 65, CBRE EVP Lisa Widmier tells GlobeSt.com. According to recent CBRE research, with strong demand for niche commercial-property assets, the senior-housing market is well positioned to attract more investment due to local supply and demand characteristics. We spoke with Widmier about those characteristics and whether the market is premature considering the Silver Tsunami of Baby Boomers coming of age for senior housing is still several years ahead.

GlobeSt.com: What local supply-and-demand characteristics make senior housing such a high-demand sector?

Widmier: Senior-housing occupancy has been relatively consistent and never significantly below 90%, even during the economic downturn in 2008. There are 23,350 professionally managed senior-housing and nursing-care communities (with 25 or more units/beds) in the US, representing 3.01 million units/beds nationally. The current estimated inventory of 3.01 million professionally managed senior-housing beds/units currently could only house 6.2% of the total estimated population over age 65, according to Neilsen and NIC MAP Data & Analysis Service. This means, we're looking at a shortage in senior-housing and elder-care facilities in the U.S. in the foreseeable future.

GlobeSt.com: With the Silver Tsunami quite a few years away, is the strength of this sector premature?

Widmier: By 2029, the 65-plus age group will account for more than 20% of the total US population. Other demographic factors will exponentially increase demand beyond just the Baby-Boomer wave, including an increasing life expectancy. Now, one out of every four 65-year-olds will live to be 90 years old, with one in of every 10 expected to live past 95 years of age. In addition, we are seeing an increasing acceptance rate. An increasing percentage of the senior population is becoming more educated about the benefits of living in senior housing and have the financial capacity to take advantage of the numerous service options available to them. A mere 1% rise in the penetration rate would result in a correlating required senior-housing supply increase of 16.2%.

GlobeSt.com: How does development come into play currently in the sector?

Widmier: With a 2016 year-over-year growth rate of 2.6%, inventory growth is below the 30-year average annual growth rate of 4%. Despite concerns of overbuilding, new construction is concentrated in the 10 biggest metro areas. Both construction as a percentage of inventory and average occupancies for each of these metros generally indicate healthy organic growth rather than oversupply. Construction as a percentage of inventory stands at only 3.8% for the majority of independent-living communities and at 7.6% for the majority of assisted-living communities. Considering both future population-demand indicators and the age of the current inventory, these figures are relatively modest. The US 75-plus population is estimated to increase by 16.2% over the next five years. If only a portion of this figure translates into actual prospective residents, the senior-housing industry is facing a severe shortage of inventory.

GlobeSt.com: What else should our readers know about senior-housing investment?

Widmier: The senior-housing industry has proven itself to be not only a defensive investment during an economic downturn, but it has also produced real estate industry-leading returns during periods of economic upswings. The seven-year total return on investment for senior housing is 13.25%, and the index for the prior four quarters stands at 11.7%. These returns are considerably higher than those of other major real estate property types.