The Retirement Communities industry is forecast to exhibit accelerated growth in the next two decades. An aging population and growing need for dementia care (care provided to those with memory impairment) are stimulating much of the industry's growth. “Retirement communities provide a number of services to assist seniors who suffer from chronic illnesses or with activities of daily living,” IBISWorld industry analyst Anna Son says. In the past five years, the number of assisted living facilities that provide dementia care has risen as a proportion of total facilities. While the industry has exhibited some resistance to the recession, a poor housing market hampers individuals' ability to move into a community because many seniors finance the expenses of retirement communities through selling their houses. As a result, the housing market's downturn over the past five years has stifled industry revenue growth. During this period, IBISWorld estimates that industry revenue will grow at an annualized rate of of 3.2% per year to total $53.9 billion, including a projected 3.1% jump in 2013.
“Profit has been pressured slightly since 2008, mainly due to costs associated with regulation compliance, although most companies have managed to maintain profitability through higher rent and entrance fees,” Son says. In addition, industry profit margins have benefited from the cutback in the supply of facilities due to hindered construction, which increased occupancy levels in existing facilities. As a result, higher occupancy rates were able to buoy the industry's profit margins, offsetting the declines in demand from those affected by the recession.
The Retirement Communities industry is highly fragmented. Currently, the four largest companies in the industry are Brookdale Senior Living, Emeritus Corporation, Five Star Quality Care and Sunrise Senior Living. Consolidation within the industry slowed during the recessionary years of 2008 and 2009, when lending was difficult to secure from banks. However, banks and private equity entities are beginning to view retirement homes and assisted living as a desirable sector again, and the major real estate investment trusts in senior housing are well-positioned to invest again.
In the five years to 2018, an improving economic environment, an aging population, healthcare reform legislation and new services will facilitate industry growth. IBISWorld estimates industry revenue will grow during the five years to 2018. As the housing market improves, more seniors will be able to sell their homes and pay resident fees. However, despite increased financing for the construction market, the supply of retirement and assisted living facilities is expected to lag behind demand. As a result, mergers and acquisitions are expected to become more common, with the number of industry companies projected to decrease in the five years to 2018. In addition, technological advances and new architectural designs will play a crucial role in industry growth as demand for innovative amenities strengthens. For more information, visit IBISWorld’s Retirement Communities in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides residential and personal care services for the elderly and other individuals who are unable to fully care for themselves or who desire to live in a community facility. The industry excludes companies that predominantly provide inpatient nursing, skilled nursing or rehabilitative services.
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