Report: Senior Housing Rent Growth Hits 6% Amid Supply Challenges

Cushman & Wakefield found low inventory and skyrocketing are hampered by stalled construction and a lack of financing for senior housing.Cushman & Wakefield found low inventory and skyrocketing are hampered by stalled construction and a lack of financing for senior housing. 

Finance  ·  Analysis

Report: Senior Housing Rent Growth Hits 6% Amid Supply Challenges

A new report from Cushman & Wakefield highlights the oncoming demographic crunch to an oft-forgotten asset class


Senior housing is experiencing a moment, and not a typically senior one. 

Low inventory and skyrocketing rents are great for property owners, but stalled construction starts and a lack of financing have complicated the underlying fundamentals for an asset class that is growing in importance as America’s senior population rapidly grows. In short, senior housing needs help to meet this moment. 

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These are the conclusions from a new investor trends report by Cushman & Wakefield (CWK), which surveyed more than 90 industry leaders and compiled 3,000 property valuations on the state of senior housing. 

“The senior housing sector, in general, is at a very interesting and somewhat unique stage in this whole cycle that commercial real estate is going through,” said Zach Bowyer, senior managing director at Cushman & Wakefield, and one of the authors of the report. “It’s probably one of the strongest performers from a property management standpoint: occupied units are at an all-time high; rent growth, while slipping compared to multifamily, still continues to strengthen in most markets … but construction financing is impossible, and new starts are at an all-time low.” 

Stabilized occupancy for senior housing has trended upward for 10 consecutive quarters, reaching 86 percent in the second quarter of 2023, while annual rent growth reached 5.9 percent in the second quarter of the year, according to Cushman & Wakefield. 

Much of the surging rent growth has been driven by supply constraints. Absorption — measured in sales or leasing levels — has outpaced inventory increases for nine straight quarters as the number of senior housing units occupied across the U.S. hit an all-time high in the third quarter of 2023. Construction starts in the sector have hit their lowest point since the 2008 Global Financial Crisis (GFC). 

“We’ve been talking about this aging population, this Baby Boomer demographic, it’s literally at the doorstop of these communities, but construction has stopped,” explained Bowyer. “The property market fundamentals will strengthen beyond what the market realizes — we’re probably approaching equilibrium from a supply and demand standpoint, but demand will skyrocket.” 

Cushman & Wakefield estimates that to meet the demographic demand required by Baby Boomers in need of senior living and hospice care, supply must rise to 35,000 new units per year, beginning today. Current five-year trailing supply trends indicate deliveries of only 26,000 units per year, and a supply shortage is expected to occur no later than 2027, according to Cushman & Wakefield. 

But building more senior housing units is only one piece of the puzzle. The U.S. needs to build enough units so most of the U.S. population can afford the cost of long-term senior living care. 

The number of middle-income seniors is expected to double by 2039, and more than half of this segment will lack the finances to pay for extended senior living, according to Cushman & Wakefield.  

“Very simple math would suggest that half of the middle-income population is not going to be able to afford basic assisted-living needs to live in these properties,” said Bowyer.  

“The lack of liquidity, the lack of construction financing, has magnified the middle-income portion of our population who can’t afford it,” he continued. “You’ll see rents go up and occupancy remain at 95 percent-plus, so there are people who can afford it at that level, but we’ll still be neglecting others.”  

On the capital markets front, senior housing investment sales fell to $3.2 billion in the first six months of 2023 — a drop of 51 percent compared to the first six months of 2022 — according to Cushman & Wakefield. The second-quarter transaction volume of $400 million for senior housing marked the lowest single-quarter volume level since the GFC. Much of this can be attributed to rising interest rates and the broad liquidity pullback being experienced across all lending sectors that’s characterized much of the dislocation in 2023. 

Moreover, at $111,000, the average price per unit of a senior housing unit is down nearly 54 percent from peak valuation of the first quarter 2022 — making it unlikely that owners will achieve a desired exit price anytime soon and thereby freezing transaction volumes in place. 

“Capital markets are still extremely dislocated, but there are $18 billion in senior housing loan maturities maturing in the next 24 months, and we think that it’s really going to force a lot of hands right now,” said Bowyer. “Sellers aren’t selling unless they have to, buyers won’t pay that price — but with loans maturing, it will basically force people to make tough decisions.”  

Brian Pascus can be reached at 



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