Multiple Tailwinds Drive Bright Outlook For Senior Living, Despite Development Woes

The senior housing sector has a multitude of tailwinds, but a lack of new development continues to hold the industry back.

That was the sentiment during the National Investment Center for Seniors Housing and Care (NIC) credit and investment webinar on March 11.

The primary tailwind for the industry is the baby boomers reaching the age where they seek out senior living, with 70% of older adults anticipated to need some form of support at some point in their lifetime, according to Caroline Clapp, senior principal at NIC. Almost half, 48%, of those older adults will need formal, paid services and supports, given a decreasing number of family caretakers.

New supply has slowed over the past two years as well, NIC Senior Principal Omar Zahraoui pointed out. In nine of the 31 primary markets the organization tracks, this metric has actually slipped into the negative, with more units being taken offline than added over the past three years, and nationwide inventory growth is below 1%. In 2025, there were less than 5,000 units added total.

“Construction as a share of inventory is running at about one-third the pace seen a decade ago across the 140 markets [in NIC’s data set],” Zahraoui said.

The rising demand and lack of development is a tailwind insofar as it is leading to record net absorption levels for the past 13 consecutive quarters, and the number of occupied units is reaching record highs. But of course, the development slowdown is a longer-term headwind, in terms of being able to meet future demand.

These trends are starting to pull new market participants off the sidelines, according to Zach Bowyer, executive managing director at Cushman & Wakefield. Valuations in senior living between construction and acquisition are beginning to level out as well, with a recent Cushman & Wakefield portfolio transaction in high barrier, affluent markets having construction costs averaging $650,000 per unit with stabilized values around $750,000 per unit.

“They’re looking at the impact on valuations there peak to trough,” Bowyer said. “I do think we are continuing to head in a positive direction there.”

However, development likely won’t begin to increase again until replacement costs are 20% to 30% higher than new build costs, at which point it “makes sense at an institutional level,” Bowyer said.

Bowyer added debt maturities could play out as another benefit for the industry as well, with2026 seeing around a total of $8 billion compared to around $180 billion in multifamily.

“I think that’s still something just from a broader market dynamic standpoint that we should keep an eye on … but I think it’s also something that will continue to help seniors [housing] gain more interest from the market,” he said.

The post Multiple Tailwinds Drive Bright Outlook for Senior Living, Despite Development Woes appeared first on Senior Housing News.