While the Federal Reserve's decision to cut interest rates will take time to impact commercial real estate valuations, this shift could significantly influence the market for senior housing and nursing homes in the short term. A new analysis from Cushman & Wakefield reveals that a confluence of dry powder from institutional investors, decreasing debt costs, and increasing maturities may create favorable conditions for opportunistic investors in the sector over the next 12 to 24 months.

Sales volume in the first quarter of the year hit its lowest level since the Great Financial Crisis, but rebounded by 65% to $1.43 billion in the following quarter. Nonetheless, the rolling annual volume for senior housing and nursing care facilities continued its decline for the tenth consecutive quarter, reaching $5.87 billion by the end of June.

"With most investment activity comprising opportunistic investments, these pricing trends are likely somewhat exaggerated, as well-capitalized owners have been waiting on the sidelines for certainty to return to the capital markets," Cushman & Wakefield noted.