HOUSTON – (By Dale King, Realty News Report) – Like nearly every industry affected by 2020, the seniors housing and care sector in Texas and across the United States has felt the severe impacts of COVID-19. Skilled nursing facilities experienced greater immediate losses than independent or assisted living communities, but demand-driven recovery is expected, according to the Mid-Year 2020 Texas Research & Forecast Report on seniors housing and care prepared by Colliers International.
Even operators whose communities were not directly hit by outbreaks have contended with disruption: isolation protocols, heightened safety measures, staffing challenges, rising operating costs, and numerous other pandemic-related pressures.
“Despite all these challenges, the industry fundamentals in the US and Texas remain positive in the long term,” states the Colliers International Houston report. Colliers concludes that Texas seniors housing remains a sound investment despite the effects of COVID-19.
Patricia Will, founder and longtime operator of Belmont Village, a Houston-based senior housing operator with 24 locations nationwide, agrees that the sector can recover and return to a more normal state. “We have to look at issues that are broader than just one year,” said Will, who is CEO of Belmont Village, which develops and operates senior living communities in Texas and other states.
Will acknowledges a temporary market slowdown driven largely by safety precautions and move-in restrictions. “The demand is there – and we have the wind in our sails,” she said. “Momentarily – like now – many centers are closed to new move-ins. We are seeing a decline in occupancy, but it will come back. Demand is coming back and is very robust.”
The demographic tailwind for seniors housing remains strong. The Baby Boomer generation is aging: the youngest Boomers are in their mid-50s, while the oldest will reach 80 in the coming years, creating a sustained pipeline of future residents.
Loneliness — Lack of Socialization
Loneliness and reduced social interaction are significant drivers in the senior housing market. While not always caused by COVID-19, pandemic-related stay-at-home orders and visitor restrictions have forced many residents to spend extended time isolated in their rooms, exacerbating social and emotional needs.
Will notes loneliness often motivates older adults who live alone to seek the social support and assistance available in senior communities. “We are a good six or seven months into the pandemic, and people are realizing that managing at home on their own is very hard,” she said.
Technology has played an important role in mitigating isolation. Increased use of WiFi and online communication tools has helped residents stay connected with family and friends. The Colliers report notes that operators’ extra measures to ensure safety and care have helped prevent large-scale departures, and WiFi usage among seniors housing residents has increased by an estimated 20 to 25 percent.
The Colliers report also highlights preexisting operational pressures: rising operating costs began before the pandemic and are expected to continue afterward. Although pandemic-related labor shortages should ease, recruiting and retaining qualified staff will remain a persistent challenge for operators.
“Prior recessions have shown that, because of its needs-based nature, seniors housing is better equipped than other sectors to handle economic turmoil,” the report adds, reinforcing the view that long-term fundamentals remain positive despite near-term setbacks.
There are still COVID-related headwinds to address. The National Investment Center for Seniors Housing and Care (NIC) reported a decline in units absorbed across primary U.S. markets during the first half of 2020, including in Texas, which experienced negative absorption totaling 1,605 units in that period.
Metro-level performance within Texas varied. On an annual basis, Houston recorded the highest demand with 285 units absorbed, followed by Dallas with 145 units. Conversely, Austin and San Antonio saw negative net absorption of 30 and 320 units, respectively.
Inventory shifts were mixed: Houston added 574 units and Dallas added 155 units during the first half of 2020, while Austin and San Antonio experienced declines of 114 and 36 units, respectively.
Occupancy rates fell across major Texas markets between Q4 2019 and Q2 2020. Construction pipelines, however, remained active: Houston had 2,473 units under construction in Q2 2020—ranked third highest nationally—while Dallas reported 2,138 units underway, ranking fifth in the country.
Two primary factors continue to support new development: continued growth in the senior population and an abundant supply of debt capital. These forces are motivating ongoing projects across the state.
Oct. 12, 2020 Realty News Report Copyright 2020.
File: Seniors Housing and the Pandemic
File: Colliers International. Belmont Village. Mid-Year 2020 Texas Research & Forecast Report. COVID-19. Seniors Housing and the Pandemic. Elena Bakina