ASHA 2019 Annual Conference Recap
The 2019 American Senior Housing Association (ASHA) held their annual meeting January 30 – February 1, 2019 at the Terranea Resort in Rancho Palos Verdes, CA. The Southern California, coastal location for the meeting couldn’t have come at a better time for those traveling from the Midwest and East Coast, there was literally a 100-degree difference in the temperatures between California and certain parts of the country. As a result, this was a very well attended conference.
Two Issues Operators Face in the Senior Housing Industry
The senior housing sector, specifically independent living, assisted living and memory care, are the primary focus for ASHA. The overall mood of the conference was upbeat and bullish on the sector. With that being said, many of the same headwinds discussed in previous blogs are still at play, and even the “best of the best” operators were not insulated from them in 2018. The two key issues operators are facing in the senior housing space are labor shortages and occupancy issues.
Labor Shortages – How Operators Can Attract Higher Quality Labor
With the amount of new supply hitting the marketplace on a national basis, labor shortages in senior housing seem to persist with little end in sight. This will be an issue the industry needs to confront on a unified basis. A campaign to highlight the joys of working in a facility could be helpful, but in reality, operators will likely have to open up their wallets and pay higher wages to attract a larger, high quality labor pool. This may result in higher rental rates for residents, but in our opinion, a higher quality labor force in the space will be worth every penny to the operators and residents alike.
When Will the Occupancy Shortage Stabilize?
Occupancy issues seemed to peak in early to mid-2018, many operators began to see a slight rebound in late 2018. Some regions in the US experienced decade low occupancy rates, which was quite alarming for many operators and investors. Most of the occupancy issues can and should be attributed to oversupply of new product in specific markets. Senior Housing has long experienced a rather low penetration rate into their target market, this is definitely an area for improvement for the industry as a whole. The recent and current construction cycle has been one of the most robust cycles senior housing has seen in nearly 15 years, and unfortunately, we are a little ahead of the curve as most baby boomers will not start consuming the senior housing product until 2025. As the new supply is absorbed, we will see a stabilization of occupancy nation-wide, especially if we can see an increase in the penetration rate, bringing a higher volume of potential residents to the market place.
The JCH Group is Always Informed of All Industry Changes
The JCH Consulting Group enjoyed a very prosperous ASHA conference and we look forward to the next event held by ASHA. For all of your senior housing needs, whether you are looking to invest or need consultation in general, please reach out to your investment specialist at JCH today!