The senior living industry is navigating a period of significant transformation. With demographic shifts, changing consumer expectations, and market consolidation, senior living operators must adapt quickly to stay relevant. To provide insight into these market dynamics, industry leaders participated in the recent Argentum webinar “An Outlook on Market Changes: Trends from Argentum’s 2024 Largest Providers Report.”
Moderated by Aaron Becker, Senior Managing Director and Head of Seniors Housing & Healthcare Production at LUMENT, the panel featured Lisa McCracken, Head of Research & Analytics at the National Investment Center for Seniors Housing & Care (NIC), and Earl Parker, President and CEO of Commonwealth Senior Living. Together, they discussed occupancy trends, integrated healthcare models, and the future of investment and consolidation activity in the sector.
Occupancy Rebounds: A Welcome Shift for Senior Living Operators
The webinar kicked off with an optimistic outlook on occupancy recovery, with the panel noting that 2024 marks a continued rebound in senior living occupancy rates. Earl Parker shared that Commonwealth Senior Living’s portfolio has exceeded pre-pandemic occupancy levels, driven by strong demand across independent living, assisted living, and memory care communities.
Lisa McCracken provided a broader market perspective, noting that the industry has experienced 13 consecutive quarters of occupancy growth, with Houston, a previously lagging market, now surpassing 80% occupancy. “We’ve been tracking a significant recovery across both primary and secondary markets,” McCracken said.
The panel cautioned that the move-in dynamics have evolved since the pandemic, with higher-acuity residents and shorter lengths of stay becoming more common. This trend poses operational challenges for providers. “We’re seeing more frequent move-outs, requiring us to work harder to maintain occupancy by driving more move-ins,” Parker explained.
The Impact of New Construction and Supply Constraints
New development in the senior living sector remains limited due to rising costs, labor shortages, and lingering supply chain disruptions. McCracken noted that construction delays have increased, with development cycles now lengthened compared to pre-pandemic timelines. Despite these challenges, demographic demand continues to rise, with the 75+ population growing faster than inventory levels.
“Operators in smaller markets are feeling the pressure, as even one new competitor can have a significant impact on occupancy,” Parker added. “In tertiary markets, every new entrant changes the competitive landscape.”
McCracken highlighted that demographic trends will play a pivotal role in shaping the future of the industry, with the largest surge in senior population expected in 2027. “We can’t just sit back and assume the demographics will carry us forward,” she said. “We need to continue investing in infrastructure and care to meet future demand.”
Margins, Inflation, and Cost Management Strategies
While occupancy recovery is encouraging, operators still face challenges in managing costs and maintaining margins. Inflation and rising labor costs remain key concerns for many communities. Parker emphasized that Commonwealth Senior Living is focused on balancing rate increases with service improvements, rather than using discounts to drive occupancy.
McCracken observed that independent living operators have offered more incentives to attract residents, whereas assisted living communities have been slower to recover. “Labor costs have stabilized, but they haven’t decreased, so operators are still feeling margin pressure,” she noted.
Integrated Healthcare Models: The Future of Senior Living
As the needs of residents evolve, senior living communities are shifting toward integrated healthcare models. Parker shared how Commonwealth Senior Living is leveraging technology and partnerships to enhance care delivery, including the recent adoption of TSO Life, a platform that captures residents’ life stories to improve care planning and communication.
“The goal is to personalize care by understanding each resident’s unique preferences and goals,” Parker said. “This approach strengthens our value proposition by delivering tailored experiences.”
The panel also discussed the growing importance of primary care integration within senior living communities. Parker explained that Commonwealth is piloting a program with eight communities to improve care coordination between therapy providers, primary care physicians, and hospice partners.
“This model not only improves care quality but also helps extend the length of stay for residents,” Parker explained. “Better communication across care teams is key to delivering better outcomes and value.”
Technology and AI: Enhancing Care and Operations
Technology is becoming an essential tool for improving efficiency and care quality within senior living communities. Parker highlighted Commonwealth’s use of Yardi’s electronic health records (EHR) to streamline operations, enhance care assessments, and ensure appropriate billing.
AI is also beginning to make inroads into senior living operations. Parker described Commonwealth’s efforts to integrate AI into its employee support systems, providing instant access to policies and procedures through an AI-driven platform.
“We are just scratching the surface of what AI can do for our operations,” Parker said. “One opportunity we’re exploring is using AI to assess emergency calls and prioritize staff responses, helping us respond more efficiently to resident needs.”
Investment and Acquisition Trends: Navigating a Shifting Market
The webinar concluded with insights into investment and acquisition trends. Aaron Becker noted that the number of deals in the senior living sector is on pace to reach record levels in 2024, though many of these involve distressed assets trading at lower values.
“There are significant opportunities for operators like Commonwealth to acquire underperforming properties and turn them around,” Parker shared. “We’ve been focused on investing in both physical upgrades and staff development to reposition these communities for success.”
McCracken observed that market consolidation is likely to continue, with some portfolios being unbundled to separate healthy and distressed assets. She predicted that the capital markets will ease in 2025, spurring more development and acquisition activity.
“We are already seeing early signs of capital freeing up,” McCracken noted. “As interest rates decline, we expect more transactions to occur, especially as investors look to reposition assets for long-term growth.”
Preparing for the Future of Senior Living
This Senior Living Insights webinar, based on the Argentum Largest Providers Report, provided a comprehensive overview of the trends shaping the future of senior living. With occupancy levels rebounding, integrated care models gaining momentum, and investment activity heating up, operators must remain agile to navigate this dynamic environment.
As the senior population continues to grow and consumer expectations evolve, the need for personalized care, integrated healthcare models, and operational efficiency will only increase. The panelists emphasized the importance of investing in technology, staff development, and infrastructure to meet these demands and remain competitive in the years ahead.
“The next few years present both challenges and opportunities for senior living operators,” Becker concluded. “By staying focused on delivering value and maintaining operational discipline, the industry can position itself for long-term success.”
This forward-looking discussion serves as a valuable resource for operators and investors alike, offering critical insights into the strategies and trends that will shape the future of senior living. Argentum would also like to thank the sponsors of this Senior Living Insights webinar, Enseo, Lifeloop and UKG. It is due to generous support of our sponsors that we are able to provide informative webinars like this one. If your company would like to sponsor a future Senior Living Insights webinar, please contact Katherine Madison today.
