During the 2025 NIC Spring Conference held recently in San Diego, NIC leadership shared the organization’s perspective on the key forces that are shaping the senior housing and care sector today and into the next several years. The goal is to understand how each of these areas is currently impacting our operations, investments, and sector growth as well as how each of these themes define who we need to be moving forward.
- Escalating Demand: Demand for senior housing and care will be driven by the significant demographic growth of the 80+ population. The baby boomer population is on our doorstep, and they will access housing and services across the full continuum. What is less clear is where and how certain services, such as skilled nursing care, will be provided. The path forward for nursing-like services will not only rely on the traditional nursing home, but on a variety of programs, platforms and innovative models with the goal of providing high-quality care in a less costly setting.
- Decreasing Supply Growth Rate: While demand is accelerating, the senior housing supply growth rate is declining with minimal new additions to inventory. While exciting to see escalating demand, that can be an indicator of a less-desirable imbalance in what we are able to deliver as a sector. We need to find a path forward to growing our sector and finding new ways to meet the needs and preferences of the aging population.
- Improving Operating Fundamentals: With the supply/demand imbalance, operating performance is showing strong, positive momentum. Forecasts of national occupancies for senior housing in the mid-90s and growth in NOI margins have contributed to our industry becoming a hot spot in commercial real estate.
- Increasing Investor Interest: In the world of commercial real estate, the senior housing sector has come into the spotlight. We not only have the committed partners who have historically been invested in our space, but also new types of capital partners allocating dollars to be a part of the future growth of this sector.
- Stabilizing Capital Markets: We remain cautiously optimistic that we are on a path in the capital markets that is better than what we experienced in 2024 and 2023. Things that we hear today include: there is plenty of private capital out there to invest; 2025 is going to be a strong year for transactions; new capital is coming into our space; and bank lending is improving. We are a growing and maturing sector, and we will need to attract new capital sources along with traditional capital partners. There are also wounds from recent pains that continue to heal and some unknowns in 2025. We are working through a sizeable number of loan maturities this year that, despite Fed rate reductions in the second half of 2024, will still face a different environment than when the loans were originated. Policy changes proposed by the current administration may also have inflationary impacts to the U.S. economy that may ripple through the economy and our sector.
- Shrinking Workforce: As the population is aging, we are seeing a wave of individuals exiting the workforce. Additionally, estimates are that roughly one-quarter of the senior housing and care workforce are immigrants. Our workforce is shrinking, and we need to find innovative ways to be smarter and more efficient. We are firm in our belief that there are ways to align the ‘high touch’ of what we do every day with the technological advancements in our space.
- Changing Customer Preferences: What we have offered as our value proposition in prior decades needs to shift. What can we do to ensure that the housing and services that we provide do not simply support additional lifespan but also support years lived in a healthier state, both mentally and physically? In 2023, the U.S. Surgeon General released an advisory on the public health crisis of loneliness and social isolation. Our settings are absolutely positioned to address this crisis and in fact, do so every day. Prevention and wellness efforts that move the needle on health outcomes and reduce difficult acute episodes, such as a fall or a hospitalization, will need to be at the center of our operational models. If we do not adapt, pivot our business models, and continue to grow options (such as Active Adult), we will have failed.
- Declining Affordability: Rising expenses are resulting in continual rate increases. There are indeed a significant number of seniors in the baby boomer cohort who have the ability to pay for the housing and services they will likely need as they age. However, we have only made incremental progress as a sector in moving the needle on those who cannot afford most of what we have to offer today – the Forgotten Middle. In many consumer circles we are seen as out of touch with the everyday older adult. We are serving some middle-income seniors, but not at the scale or pace that we need to. We need to have the fierce determination to figure out solutions to this problem. A combination of public-private partnerships may be the formula necessary to address affordability in a meaningful way.
At NIC, we stand by the ‘cautious optimism’ sentiment. As evidenced by the poll of attendees at the conference, most would agree that the outlook is positive. We need to use this time to strategically position ourselves and the industry for the big task ahead.