If It's Transit or Seniors Oriented, Investors Want it

NEW YORK CITY- Investors have stars in their eyes when it comes to seniors and transit-oriented housing because demand has outpaced supply for both asset types in core urban markets.

Moreover, shifting demographic factors such as an aging Baby Boomer population and demand for a live-work-play environment in urban markets are favorable to the seniors and transit-oriented sectors for decades to come, according to panelists at a recent Ariel Property Advisors Coffee Cap Rates Breakfast in Midtown.

The workforce mode of transportation has changed, whereas 50 years ago commuters traveled by rail and now the Millennial workforce is commuting by train. The demand is for live-work-play housing and easy access to travel about in city-environments with New York as a prime example of that, said panelist Nadir Settles, managing director and New York regional head of office real estate for the Americas at Nuveen.

On the periphery of New York City in tri-state submarkets such as Montclair, Morristown and Westfield, New Jersey, there has been a push by pro-growth and pro-landlord politicians to have transit-oriented activity to increase tax pay without stressing schools, according to Tyrone Barnes, vice president of Taconic Investment Partners.

“They’re going about it in a smart way, and I expect it will continue over the next decade,” Barnes said.

Although, some hiccups come along with lending on and developing properties within the tri-state area, near train lines where there are heavy regulations and a “not in my backyard” attitude. This has been the experience of Signature Bank in some Long Island submarkets where the firm was pursuing takeout financing for several transit-oriented communities, according to Joesph Finnegan, managing director and senior vice president at Signature.

While transit-oriented properties have been a focus for the three industry players, seniors housing has become something that each panelist is considering as the Baby Boomer population ages up.

Finnegan said the assisted living subset of seniors housing is jumping out all over Long Island, having seen Bristal Assisted Living, an operator of seniors housing, achieve strong occupancy for its three to four developments in the market.

And Nuveen is considering investments into the seniors housing sector because of its all-around favorable characteristics, according to Settles. “I think we’re going to get involved with it,” he said. “Certainly the fundamentals are there from a broader healthcare perspective, and there’s plenty of healthcare subsectors to invest in.”