While new development is at an all-time high, panelists at this year’s 3rd Annual InterFace Seniors Housing Southeast conference voiced concern over long-term undersupply in the seniors housing sector according to Zach Bowyer, MAI of CBRE’s Valuation & Advisory Seniors Housing & Care specialty practice, who moderated the Outlook for Seniors Housing Development panel.

Mr. Bowyer emphasized that not all markets perform the same and should be analyzed differently depending on the target market and care levels being offered. Caution was raised by panelists over markets with significant new development due to increased competition during lease-up. However, the long-term demographic growth points more to concerns of undersupply than concerns of overbuilding in the near-term, according to Bowyer.

“The increased development costs are requiring developers to find new ways to build and design more efficiently,” said Mr. Bowyer. “On a similar note, construction financing is tightening with lenders increasing their scrutiny on new development loans. Nevertheless, despite the increasing construction costs and lender tightening of belts, seniors housing developers continue to find yields on cost that are 200 to 300 basis points above multifamily developments.”

In addition to Mr. Bowyer of CBRE, the Outlook for Seniors Housing Development panel included Charlie Jennings, Chief Development Officer, Harbor Retirement Associates; Scott Gensler, VP of Business Development, Erickson Living; Richard Ackerman, Chairman/Senior Managing Principal, Big Rock Partners; Jeff Arnold, Chief Operating, Officer, The United Group of Companies and Jeramy Ragsdale, Principal, Thrive Senior Living.

According to the panelists the impact of the Affordable Care Act has had an impact on design trends for assisted living properties, pushing the introduction of “Innovative Care Delivery Models” that tend to be more institutional, with a focus on therapeutic or rehabilitative services. On the opposite side of the spectrum, the hospitality model is also taking off, with developers continuing to look to the lodging sector for new and innovative ways to improve social and lifestyle experiences for residents and family members.

CBRE’s Valuation & Advisory Services provides appraisal, property condition, market studies, feasibilities, underwriting due-diligence, environmental, zoning and telecommunication consulting services to a broad base of local, regional and global clients. It has a professional staff of more than 1,700 appraisers, engineers, architects and environmental scientists in more than 300 major metro areas globally. CBRE was named the leading global valuation services provider in the 2015 Euromoney real estate awards for the fourth year in a row. In addition to the global awards, CBRE was named as the leading real estate advisory firm in Western Europe, North America, Latin America and Africa, as well as the U.S. and in 20 individual countries.

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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.