Healthcare REITs: Vaccine Hesitancy
Vaccine Hesitancy: After a vaccine-driven revival, Healthcare REITs were the weakest-performing property sector in 2021 as the promising recovery in skilled nursing and senior housing has suffered Omicron-driven setbacks.
Staffing shortages have become critical issues at skilled nursing and senior housing facilities, which operators attribute to a combination of COVID-related sick days, vaccine mandates, unemployment benefits, and uncompetitive wages.
With labor costs soaring and government relief funds drying-up and reimbursement rates lagging, several skilled nursing operators have been left with the choice of either paying employees or paying rent.
Lab space demand from biotechnology and pharmaceutical companies remains insatiable, however, and has actually seen accelerating demand from the pandemic. Key geographic clusters serve as barriers to entry.
While near-term headwinds will persist until the pandemic abates, we remain optimistic on the longer-term outlook for healthcare REITs. Baby Boomers are substantially larger and wealthier than any prior generation.