Senior housing continues to stand out as one of the strongest performers in commercial real estate. New analysis from the National Investment Center for Seniors Housing & Care (NIC) shows the sector leading all NCREIF property types in both third-quarter and year-to-date returns for 2025, supported by robust demand, rising occupancy and limited new construction.
The sector posted total returns of 2.88% in the third quarter, bringing year-to-date performance to 7% — the highest among all NCREIF property types. By comparison, the broader Expanded NCREIF Property Index (NPI) reported a 1.22% total return for the quarter. In senior housing, capital appreciation rose 1.5% and income return reached 1.38%, outpacing the overall NPI’s 0.06% increase in capital appreciation and 1.16% income yield.
Independent living continued to outperform assisted living, generating third-quarter returns of 3.11% compared with 2.66%. NIC attributed this trend to higher margins in lower-acuity settings, which require less staffing and lower labor costs.
For the 12-month period ending in the third quarter, senior housing again topped all NCREIF property types with a 9.21% return, outperforming the broader NPI by nearly 450 basis points. Over the long term, the sector ranks third behind industrial and self-storage. Since NCREIF began tracking senior housing in 2003, returns have been driven approximately 60% by income yield and 40% by price appreciation. The number of senior housing properties in the NPI has expanded significantly, growing from 56 in 2003 to 213 today.
Occupancy strengthened further in the third quarter, with independent living surpassing 90% and assisted living reaching 87%. Occupied units reached another record high, while year-over-year inventory growth fell to its lowest level since NIC MAP began tracking the measure in 2006. New supply remains constrained, with units under construction at their lowest level since 2012. NIC expects these favorable market conditions to support further gains, with occupancy projected to reach new record highs in 2026.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.