Robert Ranieri shines a light on how the "silver tsunami" affects commercial real estate

WHITE PLAINS, NEW YORK (October 26, 2022) - Robert Ranieri, senior vice president/managing director of Northmarq's White Plains-based regional office, provided his insight into the senior housing sector with Propmodo in their recent story, "The Silver Tsunami's Impact on Real Estate."

While it has been considered a niche real estate investment for years, the story notes that demand for senior housing is stronger than ever before. Shifting demographics in the United States impacted this demand, with the sector prepped for rapid growth over the next decade. But with the umbrella of senior housing covering multiple development types, a large amount of nuance exists.

Another complicating factor is the increased lifespan of senior citizens. This increase not only extends senior housing stays, but also delays when senior citizens transition into senior housing.

“You know, fortunately we’re all healthier, so we’re staying in our home for longer,” Ranieri said. “Twenty years ago, everyone thought that once a person got to be 60 years old, they would move to a senior housing complex, whether it was high-end or something less glitzy, but that simply isn’t the case anymore.”

More and more elderly residents are choosing to age in place, but this trend is not enough to offset future demand for other types of senior housing. Projections indicate that the senior housing industry is stepping into a decade-long investment cycle, and even so, the sector will still be undersupplied by 600,000 units by 2045. In order to support peak demand levels, there needs to be an annual supply growth north of 25,000.

In theory, it should make a favorable scenario for lenders, but that’s not necessarily the case according to Ranieri. “I’m from the lending side, and the fact that only a few people would be willing to lend on a senior housing product just tells you, at least from my perspective, that it’s got to be high-yield,” he said. “Investors are going to expect higher returns and higher yields because it’s so labor-intensive. It’s not just housing, it’s care of people, whether they’re healthy and active or not.”

Other topics include:

  • The labor-intensive side of the industry
  • Escalating costs
  • Breaking out of the "niche" status