Key Takeaways
- • Senior living is outperforming all other commercial real estate property types, with a 10.6% total return in 2025 versus 4.9% for the Expanded NCREIF Property Index, according to NCREIF data cited by the National Investment Center for Seniors Housing & Care (NIC).
- • Senior housing posted a 3.9% total return in the second quarter, bringing year-to-date returns to 8% and marking seven consecutive quarters of outperformance against the broader NCREIF Property Index.
- • Record occupancy, limited new supply, strong rent growth and robust net operating income are driving the sector's short-, medium- and long-term outlook, per NIC head of research Lisa McCracken.
- • Harrison Street's Tom Errath said institutional investors worldwide are most interested in US senior living, and he has never seen a sector this robust in 20 years of alternative real estate investing.
- • Demand drivers include rapid growth in the 80-plus population, falling birth rates, boomer wealth and consumer underestimation of aging-in-place costs, while new supply remains difficult to deliver.
Summary
Senior living is in what experts describe as its "heyday," attracting growing interest as an alternative investment class, according to panelists who spoke at a virtual event hosted by the National Investment Center for Seniors Housing & Care (NIC). The panel, held on a Tuesday, examined the sector's credit and investment outlook as well as potential economic or sector headwinds.
Tom Errath, managing director and head of research at Harrison Street, said the firm has invested in alternative real estate for 20 years but has never seen a sector as robust as senior living is today. He said institutional investors across the globe are most interested in US senior living. Errath noted that development opportunities exist given the large number of older assets, but that affluent older adults living in $2 million to $4 million homes are not seeking studio apartments or properties more than 20 years old, and may remain in their homes if suitable options are unavailable. He anticipates the investment story will look similar over the next 12 months, with interest rates falling modestly as demand continues. He also said new supply will be hard to deliver unless projects are already underway.
Lisa McCracken, NIC head of research and analytics, described the short-, medium- and long-term outlook as positive. She cited record occupancy, limited new competition, strong rent growth and strong net operating income. Geopolitical uncertainty and the potential economic impact of rising 10-year Treasury yields were acknowledged, but she said these are unlikely to derail the sector's tailwinds. NIC Senior Principal Caroline Clapp outlined demand drivers including rapid growth in the 80-plus population, declining birth rates that reduce the number of adult children available to provide care, greater boomer wealth and the ability to pay for long-term care, and consumers underestimating the cost of aging in place.
Nicole Funari, NIC senior principal of capital strategies, said senior living continues to lead commercial real estate sectors in occupancy growth, with limited supply and strong demand supporting rent growth. According to the article, senior housing outperformed all National Council of Real Estate Investment Fiduciaries (NCREIF) property types last year with a 10.6% total return, more than double the Expanded NCREIF Property Index's 4.9%. In the second quarter, senior housing returned 3.9%, lifting year-to-date returns to 8% and beating the NCREIF Property Index by 1.3%, the seventh straight quarter of index outperformance.
NCREIF added senior housing to its benchmarking index in 2024 to improve transparency and capital access. NCREIF defines senior housing as independent living, assisted living, continuing care retirement and life plan communities, and skilled nursing facilities, while NIC typically defines it as independent living and assisted living, including memory care, and related CCRC components.
Tom Errath, managing director and head of research at Harrison Street, said the firm has invested in alternative real estate for 20 years but has never seen a sector as robust as senior living is today. He said institutional investors across the globe are most interested in US senior living. Errath noted that development opportunities exist given the large number of older assets, but that affluent older adults living in $2 million to $4 million homes are not seeking studio apartments or properties more than 20 years old, and may remain in their homes if suitable options are unavailable. He anticipates the investment story will look similar over the next 12 months, with interest rates falling modestly as demand continues. He also said new supply will be hard to deliver unless projects are already underway.
Lisa McCracken, NIC head of research and analytics, described the short-, medium- and long-term outlook as positive. She cited record occupancy, limited new competition, strong rent growth and strong net operating income. Geopolitical uncertainty and the potential economic impact of rising 10-year Treasury yields were acknowledged, but she said these are unlikely to derail the sector's tailwinds. NIC Senior Principal Caroline Clapp outlined demand drivers including rapid growth in the 80-plus population, declining birth rates that reduce the number of adult children available to provide care, greater boomer wealth and the ability to pay for long-term care, and consumers underestimating the cost of aging in place.
Nicole Funari, NIC senior principal of capital strategies, said senior living continues to lead commercial real estate sectors in occupancy growth, with limited supply and strong demand supporting rent growth. According to the article, senior housing outperformed all National Council of Real Estate Investment Fiduciaries (NCREIF) property types last year with a 10.6% total return, more than double the Expanded NCREIF Property Index's 4.9%. In the second quarter, senior housing returned 3.9%, lifting year-to-date returns to 8% and beating the NCREIF Property Index by 1.3%, the seventh straight quarter of index outperformance.
NCREIF added senior housing to its benchmarking index in 2024 to improve transparency and capital access. NCREIF defines senior housing as independent living, assisted living, continuing care retirement and life plan communities, and skilled nursing facilities, while NIC typically defines it as independent living and assisted living, including memory care, and related CCRC components.
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