Get ready America for assisted living to be the engine of growth in the seniors housing business over the next three years. That's the takeaway from a newly released survey of more than 250 industry professionals by National Real Estate Investor.

Among participants to the e-mail survey conducted in the fall of 2008 after the collapse of Lehman Brothers, 47% expect the assisted living segment to experience the most growth over the next three years, followed by independent living (43%), seniors apartments (37%), memory care facilities (27%) and continuing care retirement communities (24%).

Only 16% of respondents cite skilled nursing facilities as the business segment that will experience the most growth over the next three years.

Survey respondents represent a cross section of disciplines, ranging from commercial real estate builders, owners, developers and managers (42%) to brokers (29%), lenders (9%) and various other professionals. While they are bullish on assisted living, respondents currently are most likely to own, manage, develop or finance independent living properties.

Despite today's gloomy economic outlook for the near term, more than one in five seniors housing owners and operators expects the square footage in their portfolios to increase by at least 25% over the next two years.

Although 30% expect no change, one-third of owners and operators anticipate that their portfolios will grow by at least 10% during that time.

There is good reason for the owner/operator camp to feel it is in the path of growth. The demographic projections show a clear uptick in the graying of America in the years to come. With the first wave of baby boomers just now reaching retirement age, demand for seniors housing is expected to rise sharply over the next few decades.

From their vantage point, lenders in the short term are not as bullish as owners and operators about the prospects for an increase in the seniors housing business. In fact, lenders are evenly divided: 34% expect an increase in dollars used to finance seniors housing over the next 24 months, while 34% expect a decrease.

Three out of 10 lenders anticipate that the dollars used to finance seniors housing projects will decrease by 10% to 24% over the next two years. But another 30% of the lending community expects the amount of debt financing provided to the sector will rise at least 5% over that stretch.

While changing demographics certainly are having a positive impact on the seniors housing industry, some negative factors hang over the market like a dark cloud. On a scale of 1 to 5 — with 1 equaling no impact and 5 representing a tremendous impact — respondents conclude that the credit crunch as it relates to both borrowing and lending warrants a 3.9 rating.

Nipping at the heels of demographics on the impact scale are the soft residential housing market and the weak economy. Both, say survey respondents, merit an impact rating of 3.6.

Change in Seniors Housing Business

By what percentage do you expect the square footage of seniors housing you own or manage to change in the next 24 months? (asked of owner/manger respondents)

Increase by 25% or more	21%
Increase by 10% to 24%	13%
Increase by 5% to 9%	15%
Increase by less than 5%	6%
No change expected	30%
Decrease by less than 5%	0%
Decrease by 5% to 9%	0%
Decrease by 10% to 24%	0%
Decrease by 25% or more	0%
No answer	15%

Base: 53 owner/manager respondents

Property Types Most Affected by Aging Population

When asked which property types will be most affected by the aging population, a clear majority cite seniors housing.

Seniors Housing	83%
		12%
Apartment	54%
		18%
Retail	39%
		35%
Self-storage	22%
		49%
Office	17%
		57%
Industrial	9%
		74%

Base: all respondents, 258; multiple answers