In 2025, the senior housing sector was marked by increased occupancy and limited new supply, leading to an inventory shortfall. According to Cushman & Wakefield, net absorption was higher than supply growth “as the number of units under construction reached the lowest level since 2012.”
Additionally, in its recently released “U.S. Senior Living & Care Investor Survey and Trends Report,” Cushman & Wakefield reported that senior living valuations recovered in 2025, as cap rates fell by 24 to 50 basis points (bps). In fact, demand for larger deals continues to increase pricing for well-positioned properties and portfolios.
Other trends noted by Cushman & Wakefield analysts and survey respondents included the following.
Operating margins are increasing. The report explained that platform consolidation, technology adoption and softening in the labor markets helped, though “specialized labor remains a top concern facing the sector.”
Transaction volumes increased by 30% year over year as of Q4 2025. The majority of 2025 investments came from REITs, though institutional investors are returning to the table. Furthermore, more lenders are returning to the market.
Loan maturity concerns have diminished. Distressed loans declined to 1.85% of total volume at the end of 2025. The report explained that “resolution will likely remain elevated with increased payoff risk,” especially for older assets that have exhausted extensions, loan modifications, and forbearance options.
Investor focus is bifurcated. Survey respondents noted that core-plus and value-add investment strategies are in play. Distressed assets are being targeted, but are limited. Furthermore, a reduction of negative leverage in investor underwriting means “pricing is beginning to return to equilibrium,” the report said.
ESG is a focus—kind of. Most respondents considered environmental, social, and governance issues as more of a benefit than a direct impact on valuations.
The stated risks over the next year from respondents included the softening labor market. Additional concerns for 2026 include current interest rate levels and debt market liquidity, though investor confidence in the sector has returned.
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