Why Senior Housing Needs Twice the Units Ever Built | Arick Morton, NIC MAP

Senior housing is posting record absorption while new supply sits at Great Financial Crisis lows. Michael Bull, CCIM talks with Arick Morton, Chief Executive Officer of NIC MAP, about what that gap means for owners, investors, and developers.

Arick walks through the numbers behind the demand story: median occupancy back near 93%, more than 30 of the top 100 metros running a 95% median, transaction volume touching all-time highs, and price per unit up meaningfully. Cap rates have compressed into the 6 handles for stabilized Class A and B product in good markets, with 5 handles trading in some cases.

The supply side is the harder half. Labor costs climbed 30% to 35% between 2021 and early 2023, and because buildings sat around 80% full, almost none of it was passed through to rents. Occupancy has healed, margins have not fully caught up, and the unlevered yield on cost math still comes up short in many markets. Arick lays out what has to change before a sustained construction cycle starts.

Then the opportunity set. The 80 plus population grows roughly 35% by 2030 and 65% to 70% by 2035, which means the industry needs to deliver about twice as many units as it has ever built, every year, for the next 20 years. Arick makes the case that expanding existing communities is the fastest pressure relief valve available, since roughly two thirds of the stock is 20 to 25 years old and much of it sits on land bought before land got expensive. He also covers third party management, regional density in portfolio construction, and where AI actually helps an operator.

In this episode:

00:00  Senior Housing Market Outlook 202601:46  Meet Arick Morton, CEO of NIC MAP02:14  Record Absorption and Capital Rotating In03:45  Why Passive Capital Needs an Operating Partner04:24  New Supply at Great Financial Crisis Lows06:33  Labor Costs Up 30% to 35% and the Margin Gap07:57  Occupancy: 93% Median, 95% in 30 Plus Metros08:42  Active Adult, IL, Assisted Living, Memory Care, Skilled Nursing10:45  Cap Rates: 6 Handles, and 5s for the Best Product12:17  Transaction Volume at All-Time Highs and the NCREIF Index13:46  Owner or Operator: The Third Party Management Question15:42  Twice as Many Units, Every Year, for 20 Years17:56  The Expansion Play: Building on Land You Already Own20:02  AI, Data, and Regional Density for Operators22:13  Where to Find NIC MAP Research23:32  Final Takeaway

Connect with Arick Morton:https://www.linkedin.com/in/arickmorton/NIC MAP Website: https://www.nicmap