During the 2025 NIC Spring Conference, the organization’s leadership offered their perspective on the fundamentals driving senior housing now and through at least the next few years.
The first is demand growth. The U.S. 80-plus population continues to expand as baby boomers age and more enter that category. "Demand is exploding," Arick Morton, chief executive officer, told GlobeSt.com last August. "It's the early foreshocks of what is going to be a demographic earthquake over the next 25 years, as the boomers age." In 2025, the first boomers turn 80, which is considered a starting age for people to begin needing senior housing. "It really explodes over the next few years.” However, it is unclear what services will be available.
To that last point, the second driver is the lack of product. With demand growing, there has also been a drop in the supply growth rate. As of last September, the current senior housing development pace indicates a 550,000-unit shortfall by 2030, representing a $275 billion investment shortage. The reduced additions to inventory can indicate an undesirable imbalance in the sector. The industry needs to find a way to meet the needs of the aging population as it grows.
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Operating fundamentals are the third consideration. Performance is showing “strong, positive momentum.” The combination of a lack of sufficient supply and growing demand has enabled national occupancies in the mid-90s, with growth in NOI margins, making senior housing an attractive area in commercial real estate.
The above points lead to number four — increased demand, inadequate supply, and strengthening occupancies and margins are attracting investors. Joining historically committed partners are new types of capital partners.
Fifth is a shrinking workforce. Healthcare in general is finding it difficult to develop and keep the necessary number of workers. Not only is a wave of individuals leaving the workforce, but an estimated one-quarter of senior housing and care workers are immigrants. A shrinking workforce needs answers other than more people. Existing and new forms and uses of technology are going to be critical.
Next up, the industry seems to be on a path of stabilization for capital markets, leaving NIC leaders to express cautious optimism, with 2025 looking to be a good year for transactions with plenty of capital. There is also a “sizeable” number of loan maturities that help make the environment more complicated.
Customer preferences, number 7, are changing. They want not just physical support but mental and physical opportunities to live in a healthier state.
Finally, in eighth place is affordability. The dynamics of demand and supply are pushing rates upwards, with many who will need services unlikely to be able to afford current rates, let alone future ones. Public-private partnerships may be an important way forward.
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