Aging baby boomers and restrained construction of new facilities will drive demand
Los Angeles, CA (PRWEB) May 11, 2013
The Retirement Communities industry is anticipated to exhibit accelerated growth in the next two decades. According to IBISWorld industry analyst Anna Son, “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 with activities of daily living. Over 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 exhibits 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 constrained industry revenue growth. During this period, IBISWorld estimates that industry revenue will average growth 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. “In addition, industry profit margins have benefited from the cutback in the supply of facilities due to restrained construction, which increased occupancy levels in existing facilities,” says Son. 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, with the four largest operators accounting for about 13.7% of industry revenue in 2013. Based on total resident capacity, the top five operators of senior living facilities control only 9.0% of the market, according to the American Seniors Housing Association.
During the five years to 2018, an improving economic environment, an aging population, healthcare reform legislation and new service offerings will facilitate industry growth. IBISWorld estimates industry revenue will grow in 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 an average 0.4% per year to 14,449 operators 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.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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