Debate exists among experts about whether the United States is heading for recession or already is there, but there is some agreement that senior housing is a recession-proof investment.
Senior living occupancy is in recovery, according to the National Investment Center for Seniors Housing & Care. NIC Chief Economist Beth Burnham Mace previously told the McKnight’s Business Daily that increasing interest rates actually could contain a silver lining for senior living, and Forbes reported that senior housing investment “may become a particularly good bet if the U.S. economy slows into a recession.”
According to the latter media outlet, since the 1990s, senior housing has held its own despite economic challenges. The sector’s reputation for being recession-proof, however, dates back to the Great Depression, when occupancy rates held steady despite the challenging time, the writer noted.
Inflation hit a record high of 9.1% in June, the highest rate in four decades, according to the Wall Street Journal, “prompting investors and analysts to debate whether the Fed would consider a one-percentage-point rate increase, rather than a 0.75-point rise, later this month.” According to a recent report from JLL’s Capital Markets M&A and Corporate Advisory group, however, real estate investment trusts in general are “relatively well placed despite the recent volatility.”
The effects of the COVID-19 pandemic are starting to wane, according to JLL.
“Though COVID-19 will remain a fact of life we will all have to live with for the foreseeable future, we are seeing the COVID-19 ‘laggards’ start to make a strong bounce back, which is encouraging to see and is reflective of the broader U.S. psyche, which wants to move forward,” said Steve Hentschel, head of the mergers, acquisitions and corporate advisory group within JLL Capital Markets.
Senior housing is seeing its share of labor challenges, which, coupled with rising costs, could hamper the industry, but operators and investors remain optimistic.
“We lived through the Great Recession, and the business held up remarkably well,” Patricia Will, CEO of Belmont Village Senior Living and 2022 McKnight’s Women of Distinction Lifetime Achievement Award winner, told Forbes.“We are recession resistant,” she added.
Kathleen Steele Gaivin