The senior care industry is set for significant growth, driven by the expanding global senior population — also called the “Silver Tsunami”. By 2050, the number of people aged 60 and older is expected to more than double, reaching over two billion people worldwide (WHO). For REITs and real estate investors, this demographic shift presents a promising opportunity to grow portfolios in the senior housing sector while providing quality care and service, especially as demand outpaces supply. However, along with these growth prospects, senior housing operators and investors must address ongoing challenges—particularly operational efficiency, workforce management and balancing costs with occupancy growth.
To maximize returns, real estate investors must leverage technology to streamline operations, reduce overhead and improve workforce flexibility, all while maintaining high standards of care and service. With rising demand for senior housing comes increasing pressure on costs, making the right tools essential for unlocking efficiencies and improving net operating income (NOI). Technology not only enhances workforce management but also boosts operational confidence by equipping decision-makers with real-time analytics and insights. Without these tools, frontline decisions are prone to costly overruns, undermining both immediate gains and long-term success in the senior care landscape.
Market momentum: A senior housing growth story
The senior housing market has shown resilience, with occupancy rates increasing for 11 consecutive quarters, driven primarily by independent and assisted living communities (NIC). As of the first quarter of 2024, senior housing occupancy across 31 primary markets reached 85.6%, continuing its recovery from pandemic lows. This upward trend has been fueled by strong demand for independent and assisted living. However, skilled nursing facilities (SNFs) face a different set of challenges, continuing to grapple with workforce shortages, rising operational costs and margin pressures, particularly from reimbursement rate disparities and increasing administrative burdens (Skilled Nursing News).
The market is supported by favorable demographic trends, with the aging population, particularly the Baby Boomer generation, fueling demand for high-quality care environments. By 2030, one in six people globally will be over the age of 60 (WHO). The U.S. alone is expected to have 82 million people aged 65 and older by 2050 (PRB). This increase in the senior population will drive sustained demand for senior living over the next several decades.
Despite long-term growth prospects, investors are facing challenges in achieving strong returns. Flat or compressing cap rates for senior housing are making it difficult for operators to generate competitive yields without a clear focus on improving NOI (JLL). Maintaining high occupancy rates while controlling costs is critical for REITs seeking to enhance their internal rate of return (IRR) and overall investment performance. This is where operational technology can play an integral role in supporting facility operators in optimizing both revenue and expenses.
Key challenges for investing in the senior housing sector
Although the growth outlook for senior housing investments is positive, real estate investors must navigate a complex set of challenges to achieve their financial objectives. Below are three significant hurdles facing investors in the senior care sector:
- Financial pressures and cap rate compression: With senior housing cap rates expected to remain flat in the near term, real estate investors must focus on improving NOI as a primary driver of returns (JLL). As operating expenses continue to rise—driven by inflation, workforce shortages and increasing healthcare costs—investors need solutions that help reduce costs without sacrificing occupancy or care quality.
- Operational confidence and workforce management: The senior housing sector is labor-intensive, with a major challenge for operators: managing workforce levels in a way that balances care quality with cost control. Inefficient workforce management, scheduling and excessive reliance on short-term fixes can lead to unfilled shifts and workforce dissatisfaction, which then affect occupancy rates and overall operational performance.
- Maximizing occupancy and net operating income (NOI): Occupancy growth remains a critical performance metric for senior housing investors. Higher occupancy rates can improve revenue per available room (RevPAR) as well as positively impact NOI. However, achieving consistent occupancy growth requires a robust workforce strategy, where operators can align workforce levels with resident demand in real-time while maintaining high standards of care.
Leveraging technology to address operational challenges
As REITs and real estate investors look for ways to enhance the performance of their portfolios, technology platforms that provide real-time workforce management solutions are becoming a major differentiator. These platforms empower senior care facilities to optimize their workforce by improving scheduling, reducing administrative burdens and ensuring facilities have the right resources to meet occupancy needs.
One of the most significant advantages of using a modern workforce management platform is the ability to make data-driven decisions. Real-time analytics offer operators visibility into workforce levels, allowing them to adjust their resources in response to census fluctuations and resident needs. This flexibility reduces the risk of unfilled shifts while optimizing resource allocation, ensuring that care quality remains high.
In addition to supporting workforce optimization, platforms can also integrate with other operational systems, such as time and attendance tracking and electronic health records. This integration helps streamline operations, reduce redundancy and provide actionable insights that can be used to further improve operational efficiency and financial performance.
For REITs in the senior care space, the benefits of this approach are clear:
- Improved NOI: By reducing workforce-related inefficiencies, operators can enhance their NOI, leading to better financial outcomes for investors. Streamlined scheduling, reduced administrative costs and fewer unfilled shifts all contribute to improved operating margins, which are crucial for maintaining healthy returns in a flat cap rate environment.
- Better portfolio scalability: As REITs grow their senior housing portfolios, having scalable solutions in place becomes essential. Workforce management platforms that offer strategic visibility across multiple facilities enable operators to expand without compromising on operational efficiency or care quality. This scalability supports portfolio growth, allowing investors to capitalize on the increasing demand for senior care while minimizing operational risks.
- Enhanced workforce satisfaction and retention: A well-managed workforce is key to maintaining high-quality care and stable occupancy rates. Platforms that offer intuitive scheduling and flexible workforce options help improve job satisfaction and retention, reducing turnover and the associated costs of recruitment and training.
Strategic visibility and data-driven decision-making
In competitive markets like senior housing, having access to real-time data and predictive analytics is essential for informed decision-making. Technology platforms that provide comprehensive insights enable operators to make proactive adjustments to their workforce levels, anticipate shift needs based on occupancy trends and ensure they are adequately prepared to meet the demands of a growing resident population.
For real estate investors, this level of visibility leads to better risk management and improved portfolio performance. With detailed analytics on workforce utilization, operators can quickly see inefficiencies and implement corrective measures before they impact financial performance. This strategic approach ensures that REITs can continue to optimize their assets, even as market conditions evolve.
Platforms that incorporate predictive analytics also allow operators to forecast future workforce needs based on historical data and trends. This forward-looking capability is particularly valuable for REITs managing large portfolios, as it enables them to plan for growth while maintaining operational and cost efficiencies.
Achieving competitive returns through technology
In an environment where cap rates are flat, achieving competitive returns requires a focus on operational efficiency and revenue growth. Technology solutions designed for workforce optimization offer REITs a clear path to improving NOI, increasing occupancy rates and ultimately enhancing their overall investment performance.
Real estate investors who prioritize operational efficiency will be better positioned to capitalize on the ongoing demand for senior housing while minimizing the risks associated with workforce management. By leveraging platforms that offer real-time insights, REITs can ensure that their assets remain attractive investments, delivering both financial returns along with superior care and superior outcomes.
A path to stronger senior housing investments
As the senior care sector grows, real estate investors must navigate the complexities of managing workforce-heavy facilities while focusing on both financial performance and occupancy growth. SAMI, the award-winning workforce solution uniting OnShift’s scheduling software with ShiftKey’s independent professional marketplace, elevates care quality, operational efficiency, and financial performance. Whether managing existing assets or integrating new acquisitions, SAMI optimizes growth and asset performance while benefiting residents with better care outcomes, all supported by data-driven insights across your portfolio.
For real estate investors, SAMI’s ability to streamline operations and maximize workforce efficiency translates directly into improved net operating income (NOI) and internal rates of return (IRR). With ShiftKey’s technology, REITs can scale their senior housing portfolios effectively, leveraging data-driven insights to maintain operational confidence across multiple properties. This operational confidence ensures that decision-makers have the tools to avoid significant cost overruns and optimize resource allocation. The result is higher occupancy, better workforce management, and stronger overall returns.
Schedule a demo to explore how ShiftKey, and OnShift can drive the performance of your senior housing investments.
