Canada’s population is aging rapidly, especially as baby boomers shift into full retirement mode and life expectancies continue to increase across our prosperous and dynamic country. Demand for seniors housing has been steadily on the rise, and the rate of demand is about to increase considerably. In Ontario, demand is presently outpacing supply in the seniors housing market, with wide price ranges across the spectrum of care and asset types, creating attractive opportunities for savvy investors.
At Primecorp Commercial Realty, based in Ottawa, we are well steeped in the latest developments throughout the various markets in which we operate. Our Seniors Housing Investment Team is a dedicated group of brokers, analysts, and administrators with decades of experience, and led by Raffaele Guglielmelli, who is considered an expert in this specialized and highly competitive market. Our in-depth market knowledge, solid industry relationships and client-centric approach allow us to connect active participants in the asset class, facilitating transactions that are mutually beneficial in this rapidly expanding market.
Demand for Seniors Housing about to Explode as Baby Boomers Enter the Market
The exuberance that immediately followed the Allied victory in World War II resulted in a post-war baby boom, the likes of which had not been seen for decades in Canada. In 1946, Canada’s birthrate increased by an astounding 15 per cent, the largest increase to-date, since 1921. This marked the beginning of a “baby boom” that would last the next 20 years, until 1965 when there was an 8 per cent decrease in the birthrate, marking the end of the boom:
According to the 2011 Census, 9.6 million persons, or close to 3 Canadians out of 10 (29%), were baby boomers. Besides the number of births between 1946 and 1965, this generation has benefited from sustained immigration levels since the end of the 1980s in Canada. These people were aged between 46 and 65 in 2011 - Statistics Canada
In just three years from now, the first and largest tranche of Baby Boomers, born in 1946, will be 75 years old and good candidates for some form of seniors housing. Growth in this segment of Canada’s population is expected to continue well into the next decade:
Statistics Canada predicts the senior population aged 75 and over will grow by 53 per cent between now and 2034. In fact, by 2030, there will be 3.7 million Canadians who will need to relocate to a retirement community. - Renx.ca
Demand Currently Outpacing Supply in Seniors Housing Market for Ontario
Even with this explosion of demand in seniors housing just around the corner, the supply of seniors housing, for 2017 in Ontario, has not kept pace with current demand levels across all types of care:
Total supply of seniors’ housing grew by 2.4% to 57,663 spaces in 2017, slower than the 2.9% growth rate for the population aged 75 years and older. - CMHC
This shortfall, fueled by pent up demand and a lack of new supply in the construction pipeline, has led to the lowest vacancy rates for seniors housing in Ontario since 2001.
These prevailing market conditions have driven up the price of all types of seniors housing across the province, notably reflected in densely populated areas such as the GTA:
In the GTA, the majority of all rental spaces for seniors now cost more than $4,000 (54.1 per cent). The average monthly rent for a standard seniors’ living space in the GTA has risen to $4,159 in 2017, up from $3,825 in 2014. - Toronto Star
Ontario’s Bullish Seniors Housing Market Attracting Investor Interest
With rising prices, supply shortages, growing demand, and the high yields generated by the asset class, the seniors housing market is attracting more new capital, especially by large institutional investors. When benchmarked against other commercial real estate asset classes and equities, the ROI potential for retirement home portfolios is highly attractive and worthy of consideration. This situation is only going to intensify as Canada’s seniors demographic dramatically expands in the coming decade.
Types of Seniors Housing in the Asset Class
Aside from current market conditions and increasing competition, there are different types of seniors housing assets to consider as investments, with their own sets of regulation and oversight.
Seniors housing assets are generally divided along the spectrum of care, depending on the specific needs of individual residents, falling into two main categories: retirement residences and long term/residential care homes.
Retirement residences provide a lower level of care services to seniors, such as independent living (IL), independent supportive living (ISL), assisted living (AL) and memory care (MC), and may require licensing depending on the Province or Municipality in which the residence is located.
Long term/residential care homes are regulated and subsidized by provincial governments, offering higher levels of personal care for residents; eligibility criteria and income testing varies between provinces. Management in these facilities is more specialized and the sale of a long term/residential care home will require provincial government approval.
Primecorp Is Well Versed in the Various Types of Seniors Housing Assets
Primecorp Commercial Realty Inc. is highly experienced in facilitating sales and investments in various types of seniors housing assets across the province of Ontario. Here is sampling of some of our current listings:
This is an investment opportunity to acquire a 69-unit resident housing facility with stable cash flow, that is well-situated in the community and close to a range of retail and commercial amenities. The building has a fully operational sprinkler system and financing can be treated as clear.
This property comprises ±2 buildable acres and is part of a larger residential/retail/commercial planned community. The overall Brighton area market is undersupplied, and can support significant growth in seniors housing development over the next 10 years. The area has strong market dynamics for new, contemporary, seniors housing, stock priced at $4,000 per month; resulting from the flow of local residents migrating to other communities in search of similar accommodations. The asking price for this property is $675,000 per acre.
Located in Eastern Ontario in the united counties of Prescott and Russell, this is an opportunity to acquire a stabilized 55-unit Seniors Housing facility, comprised of a two-building complex, with approximately 25,000 square feet of space.
This is an opportunity to acquire 46 Class 'C' LTC Licenses, offered both with or without the corresponding real estate asset: A ±16,440 square foot building with a ±4,606 square foot basement on approximately 1 acre of land. The residence is part of the Champlain Local Health Integration Network – LHIN.
This asset is a newly constructed (2012) 3-storey building, with 95 unit generation of IL/AL and continuing care seniors housing. The facility includes, radiant heated flooring, designer kitchenettes and bathrooms, cable TV, high speed internet and a hotel style phone system. The residence is situated in a well-established and affluent neighbourhood. A variety of retail amenities are within walking distance. This investment opportunity has expansion potential with additional land and density.
Primecorp Is Ready to Assist with Your Seniors Housing Investment
Primecorp Commercial Realty Inc. is well positioned to advise and assist investors and operators in all aspects relating to the seniors housing market. Please contact Raffaele Guglielmelli directly at 1-888-720-2020, or firstname.lastname@example.org.