With COVID controlled, seniors sector now faces critical staffing crisis
While no industry has been untouched by repercussions of the COVID pandemic, the seniors housing and healthcare sector has been uniquely hard hit. As seniors communities have learned how to manage through the health crisis with safety and operational changes, they’ve also had to contend with the crisis of the nationwide labor shortage. Despite these challenges, however, owners and operators see brighter days ahead.
Before the 2021 National Investment Center for Seniors Housing & Care (NIC) Fall Conference, KeyBank Real Estate Capital conducted its annual survey of owners and operators of seniors housing facilities, asking them for their views on the current and future market.
- Seniors housing and healthcare executives are leaning optimistic about the year ahead.
- Staffing shortages and rising expenses are the chief challenges for owners and operators.
- Seniors housing owners expect to pursue more deals in the year ahead.
Optimism has faltered, but not failed
It’s no surprise that compared to pre-2020, owners and operators are less optimistic about the industry, but while the balance has shifted, the group overall still sees the proverbial glass as half full. Half (50%) of respondents said they are somewhat optimistic about the industry over the next 12 months, and an additional 6.25% identified as very optimistic. Contrast to 2019, 67% of seniors housing executives said they were somewhat optimistic and another 10% were very optimistic.
Labor shortage and climbing expenses worry operators
The overwhelming issue seniors housing and healthcare operators and owners brought up is the labor shortage (identified by more than 40% of respondents). Attracting and hiring qualified employees, retention and labor costs are all weighing on these executives. This concern is echoed across the industry. In fact, according to a recent report from the American Healthcare Association and National Center for Assisted Living, “Nearly every nursing home and assisted living community is asking staff to work overtime or extra shifts. Fifty-eight percent of nursing homes are limiting new admissions due to staffing shortages.”1
In addition to the significant difficulty with managing staffing, another 44% of owners and operators said “controlling expenses” was the biggest obstacle in the post-pandemic environment. Other concerns noted included: safety of residents and staff (~17%); increasing interest rates (~17%); and a real estate or financial bubble (~17%).
Multiple operators also expressed the need to refill occupancy as they deal with fall off from the pandemic and the ongoing trend for older people to age at home. Data from the NICMAP Vision reports shows that while occupancy levels have rebounded from record lows during 2020, they still haven’t reached pre-pandemic levels.2
More deals on the horizon
In the face of these challenges, seniors housing owners are still active in the deal market. More than 56% of owners expect deal volume to increase 5-10% over the next 12 months, and 37.5% expect deal volume to increase 11-20%. No respondents expected deal volume to decrease.
When asked what the greatest opportunities for business growth over the next 12 months were, a robust 56.25% chose property acquisition, 18.75% indicated new development, and 12.5% identified redevelopment. One respondent also noted that they “expect market dislocation will create opportunities.”
During crucial phase ahead, KeyBank can help
Even as the acute phase of the pandemic subsides, the complexities of owning and managing seniors housing and healthcare facilities will continue. Chief among them are managing rising expenses and the challenge of hiring and keeping quality staff, while still balancing long-term strategic and growth goals for your business.
Seniors housing owners and operators need advisors who understand both macroeconomic forces and the operational realities of your business. As one of the nation’s leading lenders in the seniors housing sector, KeyBank Real Estate Capital offers an integrated approach backed by a national platform, whether you’re seeking acquisitions or redeveloping your portfolio.