Why 2025 Could Be the Year Senior Living Deals Make a Major Comeback

Investors in senior living are recalibrating their 2025 playbooks—and confidence is high.

Despite headwinds like resident affordability, staffing gaps, inflation, higher interest rates, and looming debt maturities, many see a vibrant transaction market on the horizon. That’s the verdict of the Cushman & Wakefield Senior Living and Care H1 2025 report, which surveyed over 75 industry investors.

“We expect deal flow to pick up in the latter half of 2025. Lenders are gradually reopening their balance sheets, making debt more accessible and, in some cases, less costly,” the report states. “With $382 billion in dry powder waiting on the sidelines, we may be on the cusp of the next growth cycle as senior living’s strong performance grabs investor attention.”

High demand is already pushing occupancy to multi-year highs. Since Q2 2021, net absorption of senior living units has climbed steadily, hitting record levels in both primary and secondary markets. Active adult communities led the charge in H1 2025, boasting 95.6% occupancy and 5% rent growth—operating metrics now rivaling multifamily properties.

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To fully capitalize on this “peak demand,” supply needs to ramp up by 35,000–40,000 units annually. Yet construction remains subdued, hampered by soaring building costs and other barriers.

Cap rates also show wide variation by asset class and quality. More than half of surveyed investors believe cap rates have peaked and will stay roughly flat through 2025, though spreads above the 10-year Treasury suggest both potential undervaluation and risk—depending on property type. In H1 2025, average cap rates were 6.2% for independent living, 6.8% for assisted living, and 8.5% for memory care.

Transaction volume jumped nearly 70% year-over-year in late 2024, and early-2025 prices per unit surged 46%. Meanwhile, new construction starts dipped to levels not seen since the 2008 financial crisis, with only about 10,000 units added in the past 12 months. That reduced supply, paired with rising consumer demand, will be critical to offsetting increased operating expenses driven by labor shortages and higher insurance premiums.

Distressed‐asset sales have been lower than anticipated—just 2.8% of deals so far in 2025—signaling a shift back to core and core-plus strategies. In H1, 31% of investors focused on core acquisitions, 43% on core-plus, 13% on value-add, and only 13% on distressed opportunities.

When asked about threats to valuations over the next year, 39% cited current interest rates, 33% pointed to labor shortages, 11% to rising supply, and another 11% to regulatory changes. Liquidity concerns ranked much lower at 4%, with “other/pandemics” at 2%.

Investment preferences are evolving, too. In H1 2025, 41% of investors targeted majority assisted living properties (up from 29% in 2024), followed by independent living (16% vs. 14%) and active adult (15% vs. 13%).

With $18 billion in loans maturing over the next 24 months, lenders are favoring workouts over foreclosures. Yet the sector’s affordability challenge remains unsolved—middle-market demand is set to double by 2029, but over half of that cohort won’t be able to afford traditional senior living. Still, new design trends are starting to take shape to address this looming gap.