COVID-19 & Senior Housing : How is the sector dealing with the largest occupancy drop on record?
The latest report has just dropped, senior living sees the largest occupancy drop on record, according to data released October 15 by the National Investment Center (NIC) for Seniors Housing & Care.
How is the sector dealing with this occupancy drop? What other challenges is the sector confronting? And what are the new measures taken to face it?
Senior housing occupancy fell 2.6 percentage points to 82.1% in the third quarter, from 84.7% in the second quarter. It’s the second consecutive quarter dropping by such percentage, a steady decline since the pandemic began, according to the NIC.
Moneycontrol comes to confirm this by affirming that there are around 20 million seniors who stay alone and the number is expected to increase in the next 10 years. While most of them are independent and have an active social life, the COVID-19 contagion has made many of them rethink their decision to be on their own and many of them are contemplating moving to senior living facilities.
However, elderly people being the most vulnerable when it comes to the covid-19, measures to face this health crisis are even more important in the senior housing sector.
Countering the challenges:
The risk for severe illness from COVID-19 increases with age, with older adults at the highest risk – and the best way to protect them and help to reduce the spread of the virus is to limit their interactions with others as much as possible and ensure that they don’t venture out, even for essentials. Senior housing needs to ensure these precautions, not just during the pandemic, but otherwise too – through the broad experience of compliance.
According to Patricia Will, Founder & CEO of Belmont Village Senior Living, it’s not the demand for senior housing and care that has changed, it’s the ability to fulfill that demand. In an interview, “Prior to moving in, a resident must test negative for COVID-19. Then, they spend the first week of their stay in apartment quarantine, pending negative results on a second test. This alters the cadence of the move-in process, but we try to make it joyful, nevertheless.”
The whole focus is now on the elderly people already registered instead of welcoming newcomers. Senior Housing owners are now focusing on testing, acquiring new material for personal protection, and adjusting to new strategies to avoid contagion.
Taking new measures:
Continuing withe legacy of health & safety measures:
Facilities operators are updating intake processes with increased health screening for incoming residents, possibly completed at an alternative location. Demonstrating safety and cleanliness has become even more paramount to attracting residents and retaining trust. Judson, Northeast Ohio’s Premier Senior Living Communities Since 1906 has collated measures through prevention, screening, extensive use of masks, sanitation, visitation guidelines, testing, and communication towards safety and well-being of the residents and associates.
Further on, operators are boosting the push to protect staff with PPE and getting tested when possible. At some properties, mini-grocery stores have been created for staff members, so they do not have to risk exposure by going to traditional stores and markets.
Structural and design alterations:
Working together, providers, architects, engineers, technology vendors, and others have identified ways to keep residents safe, comfortable, and engaged—both short-term and into the future. Senior housing properties are considering thorough structural changes to their current facilities to counter the COVID-19 crisis.
Beth Burnham Mace, chief economist and director of outreach at the National Investment Center for Seniors Housing & Care (NIC) says: “Building design for all segments will change due to the COVID crisis. The ability to segregate a portion of a property to prevent the spread of illness will occur. This may evolve to “neighborhoods” within properties. Touchless technology will become more common, for elevators, doorways, lights, etc. HVAC systems will evolve as well to ensure fresh air circulates frequently, and systems will be put in place to keep the air healthy.”
Willow Valley Communities, in Lancaster – California has found ways to minimize COVID-19 exposure, enhancing safety and providing outdoor space for programs, social connections, and individual pursuits. They have built climate-controlled “Connections Cottages” to let visitors separated by a windowpane speak to residents. Among other design innovations, owners, operators, and builders are prioritizing air filtration as well.
Senior housing communities are finding digital solutions to neutralizing social isolation due to the pandemic. One senior living community introduced a new YouTube pilot channel to maintain a greater sense of normalcy in day-to-day activities.
Taking a cue from the cruise industry, an in-house production team delivers programming directly to residents’ computers or mobile devices three times a week. The developed content is a supplement to the provider’s COVID-19 activities schedule.
Japan is experimenting with robots to provide a variety of elderly services. Shintomi Nursing Home in the heart of Tokyo is making international headlines for being home to 20 models of care robots, mimicking cute furry animals, small children, human-shaped “humanoids,” or full-sized lifting and walking robots.
As many senior centers, churches, and other organizations have yet to resume group activities, senior living providers have become creative in how they reach out to seniors.
Some examples include buying coffee for seniors at their favourite morning coffee runs or offering drive-through breakfast for both prospects and referral sources. Optimism about the senior housing communities reflects the common theme that the sector, in recent years, has been more and more capital flowing to the sector on both the equity and debt side. It is a testimony for the sector that investors continue to view seniors housing as the most attractive property type compared to other sectors.
All these changes require new budgets and tremendous incremental costs, mainly for testing and PPE.
Future of senior housing:
“COVID-19 has accelerated this line of business,” says Rajit Mehta, MD and CEO Antara Senior Living and board member ASLI. On the back of rising demand from those above 60 years during the pandemic, Max India Ltd’s arm Antara Senior Living is planning to invest over Rs 300 crore over the next four years for its existing and new lines of businesses that include residences for seniors, a chain of assisted living care homes and services.
The long-term prospects remain healthy given demographic trends. Results from the sixth annual NREI/NIC seniors housing survey show a positive outlook over the coming year for sector performance and access to capital, along with predictions for a steady pace of transaction activity. Most respondents believe the sector will continue to perform well with both occupancy and rent growth in the coming year. LCS Development, a provider of comprehensive services in the US, has teams and services running at approximately 80% capacity.
Also, there have been encouraging signs from the sector – it has not experienced a decrease in rental payments. Senior housing properties are viewed as a feasible option due to the high level of services and engagement these facilities provide. The five-year annualised return for seniors housing has been high and investors view the sector as somewhat a recession-proof.
Head of Research
Rodschinson Investment Strategic Research Center