The senior living sector is poised for recovery over the next 12 to 18 months, according to Aron Will, CBRE’s vice chair and co-head of National Senior Housing Practice Capital Markets. In fact, he said, “it’ll outperform the rest of real estate and become a darling child.”
“We’re at this inflection point where operations are really starting to show tremendous promise,” Will said during a video produced by the commercial real estate services and investments firm.
He speculated that the market will be “very active and a necessity in our sector in the next 18, 24 months.”
It may not all be good news, however.
“There’s just a lot of pent-up activity that needs to clear, whether people like it or not, candidly. And so I expect a lot of activity in our space,” Will said. “I expect a lot of sales of assets and lease-ups that are not the valuations people would have hoped.”
Additionally, according to Will, the sector still is recovering from the summer of 2022, where “the capital markets turned on their head” as interest rates rose.
But Will predicted that sales and finance in senior living will be “gangbusters” over the next year to year and a half.
“There’s going to be some core plus capital that reemerges in the space, making relative value plays for senior housing, given where it’s priced now for really, really good stuff in the next 12 to 18 months,” he said.
Occupancy rates in active adult, independent living, assisted living and memory care are on the increase, he noted.
“I have a lot of conviction in this — that it’ll outperform the rest of real estate and become a darling child when it was not so much during the COVID era, given the recession resiliency, given the needs driven elements of senior housing relative to the rest of commercial real estate, which is much more macro-driven,” Will said.
On the heels of Will’s prediction came the NIC MAP market fundamentals report for the third quarter, released Thursday by the National Investment Center for Seniors Housing & Care. It predicts that senior living occupancy rates could return to pre-pandemic levels in 2024.