This time next week, we will be arriving in Dallas for the annual Spring NIC Conference. The last NIC in Houston felt relatively normal, but this conference is the first since national and state mask mandates have, for the most part, ended. And finally, the general consensus seems to be that we are in an endemic now.
So, the industry is moving on in this “new normal.” (who’s ready to hear those words a lot in Dallas?). Given that, there should be a lot of optimism around rising occupancy, low construction levels and “COVID” playbooks. But we hope some of that optimism is tempered with some realism. Occupancy is rising, but from historically low points, and with bumps along with way (as proven this winter), so many operators won’t get back to “prepandemic” levels next year or even 2024.
New development did slow during the pandemic but not to zero, and nearly everyone is chasing after the same group of potential residents out there to refill their units, with higher end communities chasing an even smaller group. That doesn’t even address the risk of the penetration rate declining post-pandemic. Just saying, there is that risk. And providers are realizing they have pricing power right now, but for how long and is it enough to offset rising costs across the board? Taking all of this into account, investors need to be realistic about their expected returns, as acquisition totals are set to boom this year.
Hopefully this doom and gloom doesn’t scare anyone away from talking to Steve or me in Dallas, and we’d love to be proven wrong. See y’all there.
