The Road Ahead: Senior Housing Trends to Watch in 2025
With financing conditions set to keep improving, investors and developers are poised to seize new opportunities in the upcoming year.
Defined by evolving market dynamics, shifting economic conditions and surging demand, the senior housing sector is set for a year of growth in 2025.
Investor activity will largely center on stabilized or near-stabilized properties in major metro areas in first- or second-tier metropolitan markets, according to JLL Senior Managing Director & Co-Head of the Senior Housing Capital Markets team Rick Swartz.
While traditional coastal markets will also remain popular, there will be a growing interest in well-performing properties in secondary cities, experts agree. High-quality assets in traditionally second-tier markets have been garnering strong interest among investors, particularly if their good performance has been sustained for a substantial period of time.
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Swarts believes that buyers will also be attracted to high-quality, vintage communities or recently renovated older properties in significantly supply-constrained submarkets.
But the economic environment, particularly the evolution of interest rates, will play a crucial role in shaping the future of senior housing investments. “If interest rates continue to decline, cap rates are likely to follow,” Swartz expects.
A more favorable lending landscape next year will help financing become competitive again, which should spur both investment and development activity. “Reduced cap rates combined with rising occupancies will ultimately stimulate new development,” Swartz said. “With historically low construction levels and financing becoming more available, new development could become more prevalent in the near term.”
Another defining trend for 2025 is the upcoming wave of loan maturities, according to Nati Kiferbaum, senior vice president & head of investment product strategy for Inland Private Capital Corp., who expects to see more than $10 billion in loan maturities.
“Many of these maturities could have capital structure/ownership stress that would lead to a significant amount of disposition activity,” he said. This situation, while challenging for some owners, will create acquisition opportunities for well-capitalized investors.
Demographics driving demand
Senior housing trends in 2025 will be heavily influenced by demographic shifts, which have continued to drive the sector’s growth. “There’s a projected increase of 47 percent in the U.S. 80+ population over the next decade,” Harrison Street Global CIO Mike Gordon noted. As a result, there will be a need to deliver more than 42,000 new senior housing units annually to meet demand.
This demographic growth contrasts sharply with the sector’s constrained inventory. “The sector has hit a 14-year low in supply, with construction starts plummeting to record lows,” said Gordon.
Tight supply has driven occupancy gains and rent growth, creating a favorable market for existing properties as investors typically seek assets with strong performance or with enormous investment opportunity.
“We see the opportunity to invest in core assets with the potential for value-add-like returns,” shared Kiferbaum. “Drivers of this will be continued margin recovery, increasing occupancies and potential for outsized rent growth.”
Despite sky-high demand and a plethora of opportunities in the senior housing sector, operational challenges will persist and property managers will need to find the right solutions to tackle labor shortages and high operational costs. “While at a macro level we are seeing wage growth moderate, staffing and occupancy recovery isn’t the case across all markets,” Kiferbaum noticed.
To remain competitive, operators will need to focus on differentiation and efficiency. “We believe that we will continue to see a flight-to-quality product in the sector, specifically operators’ ability to provide quality product that differentiates itself in the markets they are in,” said Matthew Tice, senior vice president of Inland Real Estate Acquisitions.
Strategic focus for 2025
The senior housing sector is in a highly favorable position that should generate growth in 2025. The combination of tight supply, surging demand and improving financial conditions will definitely create an environment rich with opportunity for those prepared to act strategically, but that doesn’t mean it’ll all be smooth sailing. Factors such as supply-demand imbalances, demographics and barriers to entry will continue to play a significant role in guiding investors’ decisions.
“We are geographically agnostic but are acutely focused on localizing our investment decisions,” said Kiferbaum.
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Expectations for the senior housing sector in 2025 are not just about meeting demand—they’re about adapting to the new realities of the multifamily market. Whether through thoughtful acquisitions, strategic development or operational efficiency, industry leaders will be focusing on turning current challenges into opportunities in the year ahead.
“As an industry, we are trending in the right direction,” Swartz noted. “As we continue to see more properties reach operationally stabilized levels and more stabilized transactions occur, this will build momentum and spur activity in the space.”
