REITs focused on medical real estate are increasingly shifting their investment strategies, boosting the in-demand senior housing sector.

“A lot of the REITs that were active buyers in the teens have really focused their efforts on senior housing,” Stockdale Capital Partners Managing Partner Andrew Saba told the audience at Bisnow’s Southern California Healthcare Real Estate Conference on Wednesday. 

“And at the same time, a lot of private equity has moved into it, just given the overall fundamentals of the sector,” Saba added. 

Senior housing is now the top revenue contributor to major healthcare real estate REITs like Ventas, Welltower, Healthpeak and American Healthcare REIT, and all are moving in the direction of increasing exposure to senior housing while moving away from triple-net leases and medical office space, according to commercial real estate advisory and consulting firm Capright. 

This year through August, Welltower closed or had under contract $15.5B in new senior housing investments and another $6B worth of deals in its pipeline. About a year ago, the company sold off 18M SF of medical office space in a $6B transaction as part of its plan to pivot toward senior housing. 

The steady pace of similar deals is something analysts are anticipating. Green Street raised its 2026 acquisition volume forecast to an estimated $30B for the seven healthcare REITs it tracks, according to REBusiness Online. 

But where big REITs are slowing down, new players are picking up the medical office baton and taking off. 

“There's so much new private institutional capital coming in to replace a lot of the REIT capital that used to buy a lot of the product that was out on the market,” Clarion Partners Senior Vice President, Medical Real Estate Investments Tim Olivos said onstage at the Hilton Los Angeles Culver City. 

Olivos was previously at healthcare REIT Ventas. The REIT has increased its senior living spending twice this year, landing on $4.5B in planned investments, Senior Housing News reported. Clarion Partners, where Olivos is now, is one of the many institutional capital sources looking to get into the healthcare space. It isn’t alone.

“You’re seeing virtually every source of long-duration capital, including sovereign wealth funds, pension plans, insurance companies, REITs and private equity actively pursuing the sector,” Kayne Anderson Head of Medical Office Real Estate Lee Asher told PEI PERE last month, speaking about medical outpatient properties. 

The year has been busy with just those kinds of big-ticket deals. Over the summer, Brookfield Asset Management purchased a 49% stake in a $2.1B medical office portfolio. Blue Owl Capital cut a $2.4B deal to acquire a net lease healthcare REIT in April.

While healthcare REITs are moving on, new entrants are likely zeroing in on healthcare real estate in part because of the fundamentals, Olivos said. 

“You've got new construction really being challenged by rates that are much higher than what's in place, so you can go buy buildings now and feel more comfortable with a good basis that the rents have some runway because it's hard to build right now,” Olivos said. 

Both medical office and senior housing investments are an attempt by CRE to capture value from the country’s demographics as well. 

Senior housing occupancy hit 90% nationwide in August, and it is projected that $1T would need to be spent by 2050 to maintain that level of availability, Bisnow previously reported.