Episode 5:3 James Graber with CBRE Shares Why Wellness Is the New Luxury in Senior Living

Graber provides senior living valuation and advisory services for 2,000 senior housing projects each year for CBRE, the largest real estate firm in the world. Hear his take on the current investment environment, how programming and operations are driving value, and why he is excited about opportunities in the middle market.

About James

James Graber, MAI, as a Managing Director within Valuation & Advisory Services, is the National Practice Leader of Seniors Housing & Healthcare at CBRE, the largest real estate firm in the world. As the national head of the Seniors Housing & Healthcare practice, James heads a geographically-diverse team that focuses solely on valuation and advisory services for senior’s housing assets, including active adult, independent living, assisted living, memory care, skilled nursing, and life plan communities (LPC/CCRC). The National Seniors Housing & Healthcare practice group is an industry thought leader. James regularly publishes market-leading research, contributes on industry panels, and is interviewed and quoted in various industry media outlets.

For over 15 years, James has been active in the real estate valuation industry, completing assignments throughout the United States and abroad, with primary specialization in Seniors Housing & Healthcare assets. He provided valuation and advisory services, including third-party appraisals, Fair Market Value and Fair Market Rent analyses, purchase price allocations, IPA-NAV valuations, market studies, development support as an expert witness, arbiter in value disputes, market/need studies, and feasibility analyses. His clients included lenders, operators, health systems, local and national investment firms, development and operating companies, commercial and investment banks, insurance companies, private equity firms, pension funds, and REITs.

Key Takeaways

• Graber expects “recovery” in the senior living industry in late 2021 to early 2022. There is less distress in the market than originally expected.
• There is “frothiness” in the senior living investment environment. From the equity side, there are multiple players looking to buy distressed properties; expecting a good amount of “blood in the water.”
• Adapted reuse looks good conceptually, but the conversion costs are prohibitive in most scenarios. Most hotels and motels lack seniors housing purpose-built functionality—in terms of common spaces, in-room kitchenettes, and nursing stations. From a cost standpoint, it does not pencil out.
• The word “luxury” is opaque—everyone considers what they have is luxury. Wellness is the new luxury—staffing and programming that impact residents’ lives directly. It's hard to fake a wellness program. (Graber is excited about the use of targeted nutrition and exercise programs to improve memory.)
• Staffing and operations drive seniors housing. The physical plant can be middle market, while the staff and programming are considered the top of the market.