The population in the United States is undergoing a change that hasn’t been seen in several decades. By 2034, the U.S. Census Bureau is projecting that people who are 65 years old and older will outnumber children under the age of 18.
Working in direct contrast to Japan and some European nations, America is aging at a rapid pace. U.S. Census Bureau data shows that in 2016, there were 49.2 million people age 65 or older and 73.6 million children under age 18. By 2034, the bureau estimates there will be 77 million people age 65 and older and 76.5 million children under age 18.
At the current pace of aging, that separation will get even more pronounced. By 2060, the bureau estimates there will be 94.7 million adults 65 and older and 80.1 million children 18 and under.
Commercial real estate investor Michael Eisenga says this shift is already causing changes in the senior living sector, and it will continue to do so in the coming years.
Eisenga said he believes a trend over the next 10 years will be keeping people in their homes longer. At the same time, he says that will leave plenty of opportunity for assisted living facilities to be wildly profitable.
He also predicts that assisted living facilities will find a split between public pay and private pay facilities, with the latter having the ability to offer better services and amenities. Those who stick with public pay residents will go in a completely different direction.
“I think what’s going to happen is you’re going to see developers who are going to start building assisted living facilities geared toward one end of the spectrum,” Eisenga said. “If you gear toward the public pay sector, you can make the rooms a lot smaller, and you can have more rooms in the same square footage. When I build a building right now geared toward private pay, I like to do all one-bedroom suites with a nice living area, a kitchenette, a full bathroom, and then a nice-sized bedroom. And those residences are about 650 square feet.”
If research shows that a location for building an assisted living facility is going to have more private pay residents, who are going to pay a lot more, that’s when you can cater the size of rooms, services, and amenities to what these people are going to expect.
These amenities could include an exercise room, private dining areas, a movie theater, a chapel, and a generous activities room.
This doesn’t mean that the only potential for profitability is in the private pay sector, though. As Eisenga explains:
“I think [there are] some opportunities for both sectors. I think you can strategize the public pay sector … in such a way that you can make that actually work, especially if you’re able to double up people in the same room. You just have a smaller square footage per unit with less overhead facility and fewer amenities.
“On the other hand, there are really good opportunities for private pay. That’s probably the direction that I want to continue to go into,” summed up Mike Eisenga.
About Michael Eisenga
Michael Eisenga is a successful commercial real estate investor with a banking and finance background and is the former mayor of the City of Columbus. As a President of both American Lending Solutions, a mortgage lending company (he founded and operated from 2000 to 2018), and First American Properties, he has a track record of creating and operating successful businesses. Mr. Eisenga is also devoted to property development and construction, primarily serving smaller local communities. Especially in the senior housing sector.
Company Name: First American Properties
Contact Person: Michael S. Eisenga
Email: Send Email
Address:N4365 Hwy 73
Country: United States