Top Senior Housing Trends for 2020

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Dirsuption: In 2020, the disruption threat level will rise. In fact, expect a startup to burst on the scene with major VC backing and an innovative model that gets entrenched operators quaking.

Active Adult/Independent Living: In 2020, active adult will continue to heat up, and on-demand, gig economy services and new technologies will continue to make this operational model even more viable in the years ahead. Some active adult players argue that they are not competing directly with independent living, but expect developers, investors and operators to question the value proposition of IL communities that have higher labor and dining costs and shorter length of stay than active adult, yet lack the needs-based demand and recession resilience of assisted living.

Food Delivery:  As more people of all ages embrace the ability to have food delivered with a few quick taps on a phone, senior living communities are struggling to hire and retain their culinary workers. Not to mention, dining is typically a cost center and operating margins remain under intense pressure as labor costs rise. So, expect more senior living providers to get more strategic about trimming in-house dining and supplementing with delivery services.

Owner/Operator Tensions: Clean separation between senior living owners and operators is becoming rarer. This might be a long-term positive for the industry, but in 2020 it will lead to rising tensions.  Expect more owners to forge JVs with operators or acquire them outright in 2020, and manage their portfolios much more actively than in the past. Some owners and operators will play well together and others will struggle.

Occupancy: Occupancy is still close to historical low levels, and there are already rumblings that boomers are struggling to sell their single-family homes and move to senior housing. With this as the backdrop, even a relatively mild downturn could result in serious setbacks for companies that are unprepared. Just as the oversupply problem was minor until it wasn’t, the threat of a recession might seem mild until it actually comes to pass.  The good news is that despite a yield-curve inversion in 2019, the Federal Reserve’s interest rate policy may keep the economy chugging along next year.

Adaptive Reuse: Adaptive reuse projects have converted a wide array of buildings into senior living over the years, fromhotels to schools to factories. In 2019, more types of real estate joined this list, with defunct mallsclosed universities, former farms and historic psychiatric hospitals all becoming senior housing. In 2020, senior living will be chosen as the next use for an even more surprising variety of buildings. This trend will support the growth of urban senior living.  Look for design creativity to flourish as development teams seek to preserve community landmarks even as they transform them to senior housing. While this can come with significant costs, the payoff is senior housing that is more integrated into the community, in buildings that have emotional resonance for those who move in.

Famous Brands: The brand crossover might take the form of a well-known hotel company putting its name on senior living buildings. While companies such as Hyatt have had their names on senior living in the past, the time is now ripe for another iteration of this play, because more than previous generations, baby boomers have a tenacious loyalty to their favorite brands.

Innovation, Trial and Error: One major theme to emerge in 2019 was that senior living is undergoing a “sea change” or “evolution,” and standard operating procedures — which have led to success in the past — are not sufficient to meet new needs, challenges and opportunities. Alert, forward-thinking providers are therefore experimenting with new ways of doing business and, inevitably, not all these experiments will be successful. In 2020, early innovators will encounter challenges, leading to industry hand-wringing.

Big Hires From Other Industries: For years, senior living companies have brought in talent from other industries such as hospitality and retail. But this trend is about to reach a new level, with some of the biggest names and boldest thinkers from top companies in other industries making their way into senior living C-suites.  While it’s tough to predict exactly where the next high-profile hire will come from — be it retail, airlines, technology or some other field — senior living should be an appealing option for any top executive who is seeking to make a meaningful impact in their next chapter.

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