Most Senior Living Investors Expect Flat Or Lower Cap Rates In 2026

Slightly more than three-quarters of respondents to a recent investor survey believe that senior living cap rates will come down in 2026.

Among those surveyed in the latest BBG Real Estate Services spring survey, which gathered insights from investors, developers, lenders and brokers across the country, 76% said they expect falling cap rates for product types ranging from active adult to assisted living.

The cap rate spread for active adult properties ranged about 71 basis points between class A and B properties. According to the survey, average active adult cap rates in primary markets range from 5.32% for class A properties to 6.71% for class C properties.

Independent living cap rates compressed over the past year, according to the survey’s respondents with a spread of about 67 bps. The survey states independent living cap rates in primary markets range from 5.97% for class A properties to 7.52% in class C properties. The spread between assisted living and memory care averaged 121 bps, with cap rates in primary markets ranging from 6.78% for class A properties and 8.32% for class C properties in assisted living and 7.9% for class A properties and 9.57% in class C properties in memory care.

Most survey respondents indicated they anticipated cap rates to compress by up to 25 basis points. More than half of active adult investors (about 57%), independent living investors (about 52%) and slightly fewer than half of assisted living investors (about 46%) all said they expect cap rates to compress for those product types this year.

Respondents were also asked to weigh in on what they anticipate for average unit absorption for the next year, with over 75% projecting an average of three to eight units per month in active adult, independent living and CCRCs/life plan communities. Assisted living and memory care, meanwhile, are projected to have an absorption rate of zero to four units per month.

Respondents are optimistic regarding transaction volume for the remainder of the year, with over 93% indicating they expect transaction volume to be higher than it was in 2025.

Rental rate growth is highly expected in the coming year as well, with over 90% expecting growth for all property types excluding care, according to the survey. Most respondents anticipate a 1% to 5% rate increase in 2026, while 37% project 5% or greater.

Additionally, the outlook on margin growth has somewhat decreased over the past year as well, with around 60% of respondents anticipating an increase compared to the 63.6% seen in 2025. Slightly more than 87% of respondents believe margins will expand between 3% and 5% in the next 12 months.

Survey respondents mostly predict operating expenditures to rise in the year to come. About 87% of respondents indicated operating expenses related to staffing, supplies and insurance premiums will rise 3% to 5% in the 12 months to come.

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