I have mixed emotions as I write this blog post announcing that I will be transitioning my role at NIC. After nine years of being on the staff as NIC’s Chief Economist and a comparable number of years being involved with NIC in various roles including being a member of the Board of Directors and the chair of the Research Committee, I will be stepping back to spend more time on other activities. That said, I am not entirely stepping back! I will now be a consultant and special advisor to NIC focused on monitoring and reporting changes in the economy and the capital markets that impact the senior housing and care investments and operations.
Two Hands. As an economist, with two hands of course, on one hand I am excited about this change as it will provide me time to enjoy many other interests and passions. On the other hand, I can’t entirely walk away from the passion that has consumed me for nearly 20 years—helping to support those that directly and indirectly provide care and housing options to America’s older adults in the senior living industry.
I have truly loved my professional career, especially the many years devoted to the senior housing industry. I have watched senior housing grow into an acceptable institutional investable asset class, participated in improving the understanding of the sector—both its challenges and its opportunities, and assisted in creating and growing the first market fundamentals database—NIC MAP®—–that started in 2005.
Importantly, I have helped shine a spotlight on the need to provide housing and care options for older adults and highlighted this need for the largely underserved middle-income cohort. I was privileged to co-author “The Forgotten Middle: Many Middle-Income Seniors Will Have Insufficient Resources For Housing and Health Care,” published by the leading health policy journal Health Affairs. This groundbreaking research defined the “middle market” for senior housing and care and has been the subject of dozens of news stories, opinion pieces, and panel discussions.
This is a topic that will certainly not go away, and NIC will continue to focus on this critical matter for years to come as evidenced by its importance in NIC’s recently adopted 5-year Strategic Plan. As I write this blog, my colleagues are putting together case studies that carefully describe businesses that have had successful implementations of projects that serve the Forgotten Middle. In addition, NIC is funding important research initiatives with the Milken Institute and the Joint Center for Housing at Harvard University.
Thank you, and you, and you. I have also had the honor to grow and lead NIC’s well-regarded and respected Research & Analytics Group. We have generated some amazing reports, commentaries, and analyses over many years. The NIC website, www.nic.org, provides access to many reports including white papers on the emerging active adult property type, labor market conditions, projections of future supply and demand, and the seminal NIC Investment Guide. Our content is often picked up by the media, after it has initially been released as a blog on NIC Notes or as an article in the NIC Insider Newsletter. Over the years within the Insider, we have interviewed industry leaders and icons, done deep dives on specific geographies, assessed occupancy conditions, dug into innovative ideas to address labor shortages, and featured best-in-class articles from members of NIC’s Futures Leaders Council (FLC). 
A big shout out to all the Research & Analytics team including Ryan Brooks, Caroline Clapp, Bill Kauffman, Omar Zahraoui, and of course my partner in much of this work, Chuck Harry, NIC’s Chief Operating Officer. And a big welcome to Yitao Luo and Karan Shah who have just joined the team and promise to be significant contributors to deep and important data-driven insights. And thanks to Lana Peck and Anne Standish who contributed much to the NIC Research & Analytics team in their many years of service at NIC.
And a shout out to NIC’s awesome marketing and communications team led by Laurie Tomko, who works alongside Kathy Belleville, Michael Le, Darren Jasieniecki, Leigh Anna Geraghty, and Rebeca Ahumada. And a special shout out to Cathy MacKenzie who has always supported me with great enthusiasm and professional excellence. And huge appreciation to other members of the corporate support staff including Becky Bowen, IT engineer extraordinaire, Rose Phillips, Cheryl Hills, Carla Burt and of course Priscilla Hammett, who directs NIC’s Finance and Administration team.
Over the years, I have also had the honor of presenting at many of NIC’s conferences, hosting the NIC Chats podcast, and participating in industry and other Board of Directors’ meetings. NIC’s conferences are the best, as anyone reading this blog can attest to. If you have not attended one, don’t miss the next one taking place October 23rd to 25th in Chicago. It’s also very exciting that NIC will be hosting its inaugural Data & Analytics conference on September 27th and 28th in Minneapolis. Kudos to Jill Blimline, Ashley Hurst, Jessica Pearce, Serena Lipton, Staci Goff, Jamie Bruchey, Katie Anderson, and other NIC staff team members for making these events shine with incredible execution and rich content. And I would be negligent not to mention Debbie Cohen who worked for many years supporting extraordinary content and its delivery. And, of course, thank you to the many, many volunteers that support, help create and provide robust subject matter for the conferences as well.
And lastly, thank you to the NIC Board and the NIC leadership team led by Ray Braun and formerly Brian Jurutka for providing me the opportunity to work alongside you to help co-create an awesome, effective and meaningful organization in which to work. The NIC Board deserves herculean recognition in its steadfast, deliberate, passionate guidance. Currently led by Susan Barlow, recently led by Kurt Read, preceded by Brad Razook, John Moore, Randy Richardson, Kevin McMeen, Kathy Sweeney, and Ray Braun (yes, he was formerly the Chair of the NIC Board!), it is a mighty leadership team indeed. The mission of NIC is a special one, and I feel honored to have participated in its execution.
I have had the privilege of meeting so many industry leaders and have learned much and am in awe of the work you and your organizations do for older adults. Volunteer leadership is what makes NIC able to execute its mission—thank you! It is truly an industry where you can do well by doing good.
And a special thanks to Bob Kramer, co-founder of NIC, who hired me and provided me with a vision into which to grow, a platform from which to work, and the enthusiasm and excitement that matches no other person that I have ever known.
And lastly, thank all of you reading this blog and all the many stakeholders associated with the senior housing industry broadly and NIC more specifically. Your passion to serve America’s older adults is a privilege to witness. This refers to all of you, be it the finance side of the shop, the operations, the care provision, and the well-wishers too.
Looking Ahead. Today is an exciting time for the industry with the baby boomers (finally) almost at our doorstep! Hence, I’m not entirely going away!
However, today’s turbulent capital market conditions are causing disruption in our industry. Higher debt costs have come at a difficult time for many borrowers, especially those senior housing operators who are still fighting to recover to pre-pandemic levels of occupancy—one third of operators in the NIC MAP Primary Markets have occupancy levels below 80%. Cash flows have already been hampered by rising costs associated with limited labor pools (such as average hourly earnings for assisted living employees were 6% higher than year-earlier levels in March 2023, although this does mark a significant slowdown from the 10% pace seen one-year earlier), rising food and energy costs, escalating insurance rates, and revenue growth that still has room for further recovery.
Transactions Stall. There are other consequences to the changing interest environment including the impact higher rates are having on transaction volumes, cap rates, and property valuations. The transactions market today is highly illiquid, with few transactions occurring and price transparency opaque at best. In the first quarter, transactions volumes for the senior housing and care sector fell below $800 million according to preliminary data from NIC MAP Vision, a first-quarter pace well below that of any recent prior year. Bid-ask spreads remain wide as the reality of today’s markets becomes fully understood. It’s a bit of a waiting game as sellers remain on the sidelines to see where pricing stands and as buyers wait on the sidelines because they do not want to take a negative valuation adjustment once they purchase an asset.
Property values are falling, whether measured by lower prices per unit or by higher cap rates. Private sector appreciation returns are slipping, and publicly traded REIT values, which are often a preview into the private sector, fell sharply in 2022 and from year-earlier levels in the first quarter of 2023.
When Will It All Change? The question is when will markets stabilize and what must happen for this to occur. And this is the area that I will focus on in my new role as special advisor.
I will continue to do what I have done for NIC since I was hired. I will monitor the economy and market conditions and try to the best of my ability to get ahead of it, understand it, and inform NIC’s stakeholders. It’s my passion. I love tracking current trends, listening to others, and processing information in a way that makes sense of the many data points and views that exist. My job will continue to be keeping you all informed about how today’s market conditions affect our sector and your businesses. I will strive to highlight emerging trends and opportunities.
And I will continue to work with the powerful NIC team and look forward to additional collaborations with them and the amazing base of volunteers that work side by side with the small but mighty NIC staff. While there may be near-term capital market challenges, the long-term view for the senior housing and care sector is compelling and bright, and the services provided by the sector are very much needed and in demand.
And with that, I welcome your comments and thoughts. Finally, let’s stay in touch!
Most humbly,
Beth Mace, Consultant and Special Advisor, NIC