Seniors Housing Demand Continues to Age Well

Rising occupancy rates, rising rents, and a “very muted” construction pipeline will drive seniors housing demand through 2023 and beyond, according to a new report from JLL.

The 80-plus population in the U.S. is expected to grow by more than 50% in the coming decade compared to the overall population growing just 4.7%, noted JLL managing director Bryan Lockard, MRICS, co-lead for the Seniors Housing Practice, Valuation Advisory.

“This underscores the enormous wave of pending demand for additional seniors housing and nursing care facilities providing ample opportunity for developers, owners, and investors in the sector long-term,” Lockard said.

The segment is attractive given that investors seek higher yields from alternative asset classes, according to JLL’s Valuation Advisory group’s sixth annual Seniors Housing Investor Survey and Outlook.

Nearly Half in JLL Survey Increasing Exposure

Of the investors surveyed, 44% indicated they would increase their exposure to seniors housing in 2023, and 44% indicated they would make no change to their current investments.

Only 12% of surveyed investors indicated they would decrease their exposure in 2023.

The assisted living and skilled nursing segments of the sector were painted as more attractive this year, with 31% of respondents indicating they would invest in assisted living up from 28% in 2022, and 26% of investors interested in skilled nursing, up from 17% the prior year.

Q4 2022 marked the seventh quarter in a row for positive absorption. Inversely, inventory growth has fallen 41% on average in the same time periods.

Stabilized occupancy reached a historic low of 80.3% across primary markets post-COVID. Since then, occupancy has risen to 84.4% in primary markets and up 5% in secondary markets to 85.9%.

Of the top 30 markets JLL tracked, 27 are in the Sunbelt.