With positive momentum on occupancy and margin in 2024, the senior living industry is poised to capitalize on incoming demand — but many challenges remain.
These challenges include still-tough development conditions as the supply and demand gap widened this year, which led to investors and developers in the space mostly shying away from rapid new construction.
Other challenges remain in creating an affordable product accessible for older adults of all financial standing, and creating inclusive spaces to meet the needs of a truly diverse population of older adults.
But at the same time, there’s immense opportunity ahead for the industry as providers grow their operating models, evolving to meet the needs of residents that demand more lifestyle and wellness offerings.
These and other trends were evident in leaders’ statements captured in Senior Housing News in 2024, and the following excerpts highlight the strides made across the sector this year as organizations carry big aspirations into 2025.
“There is going to be, I think, a tremendous amount of deals [and] development opportunities, probably more toward mid- to later-2025.” – Charter Senior Living CEO Keven Bennema
Bennema’s comments came as Charter Senior Living was busy. The company took on management of 20 communities and opened two new developments, with three projects expected next year and 2026.
With three rate cuts by the U.S. Federal Reserve in 2024, coupled with transaction volume of publicly-announced senior housing deals exceeding the deal volumes reported in 2022 and 2023, it’s clear why there’s still optimism held by Bennema and others in the industry.
Low supply and development will give operators a chance to bulk up and continue to drive census in 2025 and beyond, as more favorable financing conditions could materialize in the latter half of the new year and bring capital-strapped investors off the sidelines.
Still, there’s uncertainty that surrounds that optimistic mindset, as operators are trying to get the timing right on their expansion plans to serve the incoming baby boomer generation.
“If you look at any industry, any economic downturn, the recovery takes more time than the downturn.” – Omar Zahraoui, Senior Principal, the National Investment Center for Seniors Housing & Care
The last four years for the industry have brought some of the greatest challenges to bear in regard to staffing, affordability and a gambit of operational challenges. But the industry has made up incredible ground from the troubling days of 2020, and signs point to the long recovery period nearing its end – barring another big shock to the system.
NIC forecasts the industry could hit 92% occupancy by the end of 2026 if current trends remain steady, with the average occupancy being 86.5% in the third quarter of 2024, 1.2% below the first quarter of 2020.
The lack of new construction starts in the last four years has helped drive this rebound in occupancy.
While there are short-term revenue opportunities due to lack of new supply, companies risk potentially failing to meet long-term demand for senior living, which makes 2025 exceedingly more crucial for new growth to continue.
This has led some operators to push hard on reinvesting in or repositioning communities to meet incoming demand, as we’ve charted how Maplewood, Felician Services, Senior Lifestyle and LifeSpire are taking reinvestment postures heading into 2025.
“Our sales and marketing teams are leaning into new and unique sales campaigns at the local market and national level to drive qualified leads and attract new residents.” – Brookdale CEO Cindy Baier
This year also saw senior living operators of varying sizes take different approaches to sales and marketing tactics, as providers moved away from third-party referral sources in lieu of more in-house, ground-up sales efforts.
Brookdale Senior Living (NYSE: BKD) is not the only publicly-traded company in the industry to pivot away from third-party referrals to internal marketing and advertising. Sonida Senior Living (NYSE: SNDA) is also making the change.
Sales and marketing efforts in 2024 also centered on online communication with prospects and even reimagining how operators hire sales staff.
Earlier this year, Michigan-based operator Beztak shared how characterizing sales staff selling styles has helped in hiring new sales team members. There are still perennial challenges regarding response time to online and phone inquiries, but some operators appear to be getting serious about treating inquiries with more urgency, akin to a senior living “911 call.”
However, it’s no secret that sales and marketing efforts in the industry remain a challenge, chief among them connecting with families and prospects unfamiliar with the industry, especially if companies want to bring in younger residents.
“[Operators] must be careful in assuming large rate increases.” – Discovery Senior Living CEO Richard Hutchinson
In 2024, operators increased resident rental rates at a steeper pace than what’s anticipated for 2025 as higher revenue and lower costs – aided by trends in higher occupancy and length of stay, and easing inflationary pressure – push average margins higher.
Companies like Discovery Senior Living have relied on market data to fine tune rates, from single-digit increases in some markets to double-digit increases in others.
Demonstrating value remains a tough task for operators, as some companies have taken steps to renovate aging communities to be able to drive rate.
But one thing is clear: Operators are taking a more precise tact in implementing rate increases in 2025 and beyond.
“We feel that this is the real estate cycle to really invest in, and we don’t know how large the window is going to be. This is an opportunity to co-invest and be alongside our great capital partners, and having a little skin in the game, it’s a really exciting next phase for us.” – Priority Life Care CEO Sevy Petras
In 2024, some senior living operators took strides to fuel future growth through various funding efforts. In May, New Perspective Senior Living announced a $200 million capital infusion and plans for $500 million allocated for future acquisitions and development.
In August, Priority Life Care launched a general partner co-investment fund of $10 million to fuel $200 million in total equity for acquisitions and co-investment.
Also this past summer, Brightview Senior Living launched its ninth fund with a target of over $200 million. The company’s previous fund, which saw contributions from 363 investors, brought in $202 million, effectively financing construction of eight communities through 2026.
Earlier this fall, Stellar Senior Living announced plans for a $25 million equity and joint venture investment effort to capitalize on the wealth of acquisitions available for operators as development remains muted.
While development conditions remain a challenge, senior living operators have pivoted their growth strategies, and are poised to deploy significant amounts of capital in 2025 and beyond.
“Waiting is not a game that developers play.” – Shannon Rusk, Senior Vice President of Development, Midwest, Oppidan
Even while conditions for new development are less than favorable, those active in building new communities kept a sense of urgency in 2024, noting the turnaround time it takes for a project to get built and opened.
This sense of urgency could be warranted as the duration between construction and opening has only increased in recent years. NIC put the average construction project ranging between 24 months and 25 months in the last two years.
Aging supply remains a top concern for operators looking to capture incoming demand, with NIC data showing that approximately 41% of senior living communities are more than 25 years old. That coincides with the population of those 80 years and older growing by 35% by 2030, an increase of 5.1 million older adults, NIC data shows.
Colorado-based Experience Senior Living is one of the senior living providers that pushed ahead on new development in 2024, with multiple projects in varying forms of construction in urban and primary markets.
While there are many acquisition opportunities, building new communities can help better capture new resident demand, bringing in younger residents. This year, a select few operators came off the sidelines pushing new development, but whether that changes in 2025 remains to be seen.
“Half of it is having the passion and commitment for change … We have to make sure that it’s not just lip service and we want to reduce or eliminate fear — that’s our mantra.” – Watermark Retirement Communities CEO and President David Barnes
Even amid “DEI fatigue,” Senior Housing News did report on some senior living operators in 2024 putting forth a renewed effort to connect with LGBTQ+ older adults, especially trans older adults, to further inclusivity in the industry. This is a key way operators can improve DEI efforts in their communities, and operators begin to recognize that connecting to LGBTQ+ individuals isn’t just a marketing tool — it’s a “business value-add.”
Operators have partnered with Services and Advocacy for LGBTQ+ Elders (SAGE) in 2024 to bring new training and cultural competency for their staff, while also updating policies to create more inclusive workplaces for employees.
This effort moving away from lip service to direct action will be an important issue to watch moving into 2025, particularly in light of shifts in the country’s political alignment and in business policies – see Walmart’s recent rollback of DEI initiatives as one example.
“A company that controls its real estate and controls its operations is going to have unlimited value because you don’t have to pry one from the other to make a sale. It’s all synergetic.” – Aegis Living CEO Dwayne Clark
In 2024, operators took action to acquire greater control of their portfolios.
Brookdale Senior Living (NYSE: BKD) is arguably the most visible example, as the industry giant purchased 41 of its leased communities for $610 million.
While not all operating companies have the ability to buy portions of their portfolios, those with lease-to-purchase contracts could be well positioned to take greater control of communities as the industry changes the calendar to 2025.
“The shift from fee-for-service into value-based care is high octane and higher risk.” – Solera Senior Living CEO Adam Kaplan
The pace of value-based care adoption in senior living appeared to accelerate into a higher gear in 2024, as providers including Benchmark Senior Living, Epoch Senior Living and 12 Oaks Senior Living announced various new partnerships for primary care alignment, technology integration or care coordination.
Brookdale expanded its rollout and growth of the HealthPlus program in preparation for a time when “virtually every senior will be on a Medicare Advantage plan” in the future, Baier told SHN earlier this year.
Also in 2024, senior living companies, including operators and tech platforms, announced their involvement with the Guiding an Improved Dementia Experience (GUIDE) model from the Centers for Medicare & Medicaid Services (CMS). This could allow for operators to better achieve value-based care goals related to care integration and cost savings, specifically in serving those with memory care needs.
But high risk and potential misalignment between health care providers and payers make the shift to value-based care a tenuous process that’s slowly playing out as “more needs to be done,” the American Hospital Association said earlier this year.
Kaplan pointed out the benefits of and risks associated with value-based care — but even though it remains a steep hill, senior living providers will continue climbing it in 2025.