Higher demand for U.S. senior housing real estate attracts investors

Global Business

Investors are looking harder than ever at health care real estate in the U.S. This class of commercial real estate has been outperforming most others since the 2008 recession. CCTV’s Chris Casquejo reported a growing population of aging Americans is boosting confidence in the sector’s long-term potential.

Higher demand for U.S. senior housing real estate attracts investors

Higher demand for U.S. senior housing real estate attracts investors

Investors are looking harder than ever at health care real estate in the U.S. This class of commercial real estate has been outperforming most others since the 2008 recession. CCTV's Chris Casquejo reported a growing population of aging Americans is boosting confidence in the sector's long-term potential.
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At one assisted-living facility in Seattle, 89-year-old Lloyd Yates has no trouble keeping busy, whether he’s making a mosaic with a staff member or exploring the city.

“Three or four things to do every day. So you don’t just sit in your room and read the newspaper,” Yates said.

Construction of assisted-living developments in the U.S. is way up over the past four years-doubling the building rate of new units. Aegis Living, which operates this community, has five new developments under construction to add to the 30 it already runs across three states.

One of big draws of assisted living: Residents often don’t have to leave the building for health care, a major concern for those with mobility limitations or memory issues brought on by Alzheimer’s or dementia.

Percentage of population aged 60 years or over in 2013

Darker shades show higher percentage of older populations. Source: United Nations, Department of Economic and Social Affairs.

“The most terrible thing to do is to bring somebody out into a location where they don’t know what’s going on around them. So we bring the doctors in. We have the psychologists come in. We have the general practitioner come in. We do everything besides operations right here in the building,” said Marc Nowak, vice president of operations for Aegis Living.

The trend of moving medical procedures out of hospitals is also contributing to a surge in medical office building construction, like this 20,000 square meter development due to open this summer. The developer says nearly half of the space is already rented.

Sales of medical office buildings totaled about $5 billion last year alone, and experts say medical office space is more stable than other real estate sectors.

“Medical office tenants are notoriously sticky. They’re in a building. They don’t move. They have a 90 percent renewal rate. And there’s a low risk of medical office tenants going out of business,” said Paul Carr, first vice president of CBRE Healthcare Properties.

Trends in health care that are not likely to go away any time soon. By 2050, the number of people in the U.S. aged 65 and over is expected to nearly double.