A growing wave of seniors is driving increased investment in the alternative real estate sector as "boomers" age into it.
Transaction volume for senior living assets and the care sector boomed nationwide in the fourth quarter, up over 50% from Q3 and 30% year-over-year, according to a Cushman & Wakefield report. The majority of investments came from REITs, but renewed optimism also brought institutional investors back into the mix.
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Valuations in the sector recovered significantly in 2025, up 10% year-over-year. Capitalization rates compressed by 25 to 50 basis points, and 71% of respondents to Cushman's investor survey expect cap rates to decrease through 2026.
"Not only is this a strong indication that valuations have bottomed, survey results further indicate the return of investor confidence in the sector," the brokerage's authors wrote in the report.
The report described the sector's tailwinds as "stronger than ever." Supply needs to increase by roughly 70K units per year between now and 2036 to meet peak demand, but less than 6,000 units came online in 2025 — a supply shortfall for the senior population.
Survey respondents identified the majority of assisted living properties as the greatest investment opportunity this year and remained bullish on active adult as well.
Labor markets emerged as the top concern among survey respondents for valuations over the next 12 months, followed by current interest rates and debt market liquidity.
Some companies have already made preparations for additional senior housing activity in 2026.
Heitman closed its latest fund in mid-January with $2B in capital commitments and is looking to buy alternative assets, including senior housing. At the time of the close, the company had already deployed $847M across 12 investments, a company spokesperson told Bisnow.
Healthpeak Properties announced in early January it plans to spin off its senior housing portfolio into a new publicly traded REIT without selling off its properties. The REIT, Janus Living, will be backed by 34 senior housing communities.
“Given its relative scale within Healthpeak, it has been difficult for the public markets to recognize our senior housing platform’s capabilities and properly value the portfolio,” Healthpeak CEO Scott Brinker said at the time.
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