Senior Living Stakeholders Expect Cap Rates To Continue Falling In 2026

Cap rates are on the decline while rental rate increases are expected to stay moderate throughout the remainder of 2026.

That’s according to the first-half 2026 U.S. senior housing and care investor survey from CBRE. The survey included responses from a range from industry stakeholders, including private capital investors, brokers, real estate investment trusts, developers and institutional investors.

Slightly less than three-fourths of respondents reported cap rates have decreased since CBRE’s previous survey in October, with an average 19% decrease across senior living.

Two product types, assisted living and independent living, saw the greatest declines in cap rates by 20 basis points, with memory care dropping by 18 basis points followed by active adult at 16 basis points. Owners of Class A assisted living communities experienced the biggest cap rate decline in the past six months with a decrease of 28 basis points in that time. That is followed by Class A independent living and memory care at 24 basis points to 5.9% and 8% respectively, according to the survey. 

The spread between asset classes is “essentially unchanged” from the October survey, with an increase of three basis points in the last six months, according to the survey. The average spread between core and non core assets increased to 58 basis points, representing a gain of two basis points from the previous survey.

Looking ahead, fewer respondents indicate cap rates are likely to continue compressing compared to the previous survey, with 59% expecting a decrease compared to 84% back in October. Meanwhile, 35% expect no change, up from 16% in the previous survey.

Respondents expect rent growth to grow between 3% and 7% over the next 12 months, according to the survey. None of the respondents indicated underwriting above 7% for the fourth consecutive survey and none anticipate a decrease. CBRE forecasts rent growth of 5% over the next three years, the survey states, with current market rents “well below levels that make new development feasible, though the gap is expected to narrow this year.”

Most respondents, more than 84%, expect rent growth in assisted living to range between that 3% and 7% figure.

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