EXPERTISE IN ACTION:
Ask the Expert - Todd Goodrich
Posted on
June 25, 2010
Question: In this slowly-recovering economy, what is the outlook for senior living construction projects in the region?
Answer: In an economy where commercial construction has been challenged across the board, we’re cautiously optimistic about the trends we’ve seen in senior living in the region and beyond. That being said, the market does have its share of continuing challenges, some of which include:
Lending:
New project financing is still difficult in the senior living market, just as it is everywhere else in the construction industry, as finance and capital markets heal slowly. Banks are living by new rules; stricter lending criteria and fewer dollars to go around, however, mean that the projects that are most viable are the ones getting built, meaning a safer more calculated investment for all involved. Additionally, funding for renovations, particularly those that include green retrofitting components, may be more readily available through stimulus dollars and other “green financing” initiatives.
Housing Market Fallout:As in any market that is housing-related, the outlook is impacted by the distressed single-family housing market. While recovery continues, the fact remains that many seniors have homes to sell before they move to a multifamily senior living facility of any type – resulting in a demand that is dependent, in part, on the health of the housing market on the whole.
Changed Economy, Different Approach:With the economy changed forever, so is the approach to and expectations for senior living development design – with more economical use of space being the primary trend. Construction firms working in the industry must adjust our approach – from pre-construction on – accordingly.
Despite these challenges, however, the demand – with an aging population seeking more affordable housing options – suggests that senior living will continue to be one of the healthier markets in the construction industry for 2010. And new facility construction isn’t the only opportunity out there – in tight times, many owners and developers are opting for renovations, including green retrofittings, and repositionings of new facilities.
For construction firms, like Paric, who have positioned themselves as experienced senior living leaders -- and particularly those who have a firm grasp on the risk management aspect of the industry -- senior living could easily be a bright spot in a recovery year.
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