By Steve Moran
An old Chinese curse is translated as “May you live in interesting times.” This is senior living in the fall of 2022.
There is a ton of public exuberance about senior living; a few of the things I heard from the stage …
“It remains a great investment.”
“We are completely excited about the future.”
“The demographics are in our favor.”
“The problems will dissipate.”
But in the Halls …
In talking to operators over and over again, I heard stories of low occupancy, staffing woes, increasing expenses, and rising interest rates. While there is a general sense of keeping on and keeping going, leaders are exhausted and frustrated.
This one incident encapsulates it all: One afternoon I crossed paths with a reader on the escalator who shouted out to me, “Are you going to write about the death of senior living?”
There are some senior living communities that are doing well — mostly, but not exclusively, single-site large campuses and even some organizations. But everyone is facing higher costs, which means a big double whammy: higher direct costs and ultimately, further wage increases, as team members face increased costs of living.
Mostly, people are getting their butts kicked — even great operators. This means we can expect more shuffling of operators by capital providers.
Maybe I am overthinking this, but I was struck by the repeated use of the term “senior living platforms” by capital providers to describe their portfolio of senior living communities. This would suggest that senior living is simply another investment, like multifamily, ministorage, or commercial office buildings.
On one hand, I get it: Capital providers have a goal of making the highest possible risk-adjusted return on their investments. Yet senior living is not the same as ministorage. If a ministorage underperforms and cuts costs and defers maintenance, that will not destroy people’s lives. If a capital provider demands certain returns and an operator responds by making similar adjustments in senior living, it does real damage to vulnerable people — obviously residents, but also frontline workers, many of whom are just barely making it.
There are four real reasons to be optimistic:
- This is the most important. Great operators will continue to create life-impacting experiences for residents and team members. This means that those operators will be the place every single person who works in senior living wants to work. It means that when people say yes to senior living, those communities will be the first places that older people want to move into and that families love.
- Because of higher interest rates, development will continue to slow, which will in turn give demand a chance to catch up with supply. I offer this with caution. More and more people and organizations are working on ways to serve older people that don’t involve senior living.
- There is a demographic wave coming that will increase the number of people seeking senior living.
- More leaders than ever are saying senior living needs reinvention and are thinking about how to do a better job of creating better experiences. I am not sure we will ever become a real lifestyle choice (excepting life plan communities and active 55+), but that does not mean we can’t increase the appeal to those who right now are choosing to stay home.
I would love to hear your thoughts if you were there.