With one of the oldest populations in the nation, New Hampshire has been seeing a spike in construction of assisted living communities, as well as expansion of some existing ones. 

But experts predict demand for senior housing will soften, at least in certain parts of the state, before picking up again when Baby Boomers start to turn 80 and need more services. 

In roughly the last five years, 20 new assisted living facilities have been built or are under construction in New Hampshire, according to Wendy J. Smigelski, life code specialist for the state Health Facilities Administration – eight in the booming Seacoast alone. Another five are in the western part of the state and four in southern New Hampshire, with the rest in other areas. 

In addition, some longstanding assisted living homes have been adding dementia or long-term care units, Smigelski said, or performing renovations to make their facilities code-compliant for residents with higher care needs. 

Newer Facilities Competing on Amenities 

It all comes as no surprise to Eldon Munson, president of the New Hampshire Association of Residential Care Homes  and a consultant in the field of independent living, assisted living and memory care developments.  

He witnessed “slow and steady” growth in the field from about 1980 to 2005, a slowdown after the recession of 2008 and a rebound starting in 2012. The state’s moratorium on nursing home beds has only contributed to demand, he said. 

Noting that developers need a certain population density to ensure their facilities will be filled, he said that “people who do their research and want a sufficient population of people are sticking to the Seacoast and the Manchester area to the [Massachusetts] border, Salem and Nashua. … That’s where your best chance is to get enough residents to fill the communities.” 

New Hampshire has the second oldest median age in the nation, and Brendan W. Williams, president and CEO of the New Hampshire Health Care Association sees a continued need for assisted living communities. 

But he offered a note of caution. 

“I think people sometimes get into this with the ‘if you build it, they will come’ attitude and that doesn’t always play out,” he said. “You have to be able to ride out a period of low occupancy to build occupancy.” 

He pointed to the former Sanctuary at Rye assisted living facility, which declared bankruptcy in 2017. Under new owners, it is now Evolve at Rye. 

Munson also pointed to another trend among the state’s senior living communities – a move away from smaller, owner-operated facilities to larger, commercial developments, sometimes with headquarters out of state. 

Munson did an analysis two years ago and found that the median size of an assisted living community in New Hampshire was 24 beds. In the newer facilities coming in, that figure is more like 70 to 90, he said. Many also offer lifestyle amenities not found in older developments. 

One example is the RiverWoods Durham nonprofit continuing care community, now under construction, which is slated to include 150 apartments, a fitness center, arts studio and meeting spaces along with assisted living, memory care and skilled nursing with a 72-bed capacity.  The units sold out within 29 days after being marketed. The RiverWoods Group also includes RiverWoods Exeter and Birch Hill Terrace in Manchester. 

Investors Drawn Northward 

That fits in with a national trend noted by Zach Bowyer, seniors housing and care practice leader for CBRE Valuations & Advisory Services. Within the last four months, he said, “the percentage of overall starts has shifted from assisted living and memory care and more to lifestyle-focused [communities].” 

Bowyer said New Hampshire is benefitting from the decreasing capitalization rates in core markets like Metro Boston, which is pushing investors to bring their expertise and investment capital to places like the Granite State. 

Massachusetts-based Benchmark now has five senior communities in New Hampshire, and New York-based Kaplan Development Group has three. 

Nationally, independent living and assisted living investment volume in the second quarter of 2018 was up 27.3 percent, according to CBRE’s recent U.S. Seniors Housing & Care Investor Survey and Trends Report. But the study also found that “senior housing occupancy rates continue to edge downward.” 

Average occupancy in all senior housing (independent living, assisted living and memory care) in New Hampshire’s Stratford County is 86.6 percent, according to the National Investment Center for the Seniors Housing & Care Industry, while in Rockingham County it averages 94.4 percent. 

With higher than average households of those 75 and older in both counties, Stratford County’s below-market occupancy levels should recover as long as construction tapers, according to Bowyer, while Rockingham County “can likely still benefit and absorb additional supply.” 

Constraints on Growth – For Now 

Munson sees the potential for additional building in communities like Dover as “topped out” for now.  

“I think the future is for very select growth,” he said. “One constraint the industry works under is the cost of building to life safety codes. The provider or the developer has to be very aware of construction costs and the costs of meeting codes because the building has to be supported by residencies. In the future, it will be a very expensive proposition to make that work.” 

Demand may make it worthwhile, experts agree. 

CBRE’s report noted Baby Boomers, who comprise 76.5 million people and 25 percent of the population, “will not directly impact occupancy for another 10 to 15 years.”  

Supply growth in senior housing will outpace demand through 2025 by 350,000 units, the report predicted, after which the pendulum will swing toward a significant supply shortage. 

“Despite the short-term concerns about overloading,” Bowyer said, “when you look down the road we’re going to have a significant shortage.” 

Munson agreed. 

“The peak of seniors reaching residential care age has not arrived,” he said. “In five years, there will be additional demand.”