BBG Seniors Housing Investor Survey Reveals Key Market Trends in 2024
Dallas – March 5, 2024 – BBG, one of the leading independent commercial real estate services firms in the nation, today unveiled the results of its influential U.S. seniors housing investor survey for the year, marking the second annual edition of this in-depth analysis. The survey captures the perspectives of top market professionals on pivotal trends set to influence this vibrant alternative asset class throughout 2024.
In January 2024, the survey drew participation from an array of integral figures in the U.S. seniors housing sphere, including foremost investors, developers, lenders, and brokers. Its focus extended over critical determinants expected to sway the sector, such as capitalization and rental rates, stabilized occupancy levels, operating expenses, and other essential market performance indicators.
A blend of anticipated trends emerged from the survey’s findings, including the potential for capitalization rate compression, an escalation in transaction volume, and a downtrend in interest rates. R.J. DeBee III, BBG’s Managing Director and National Seniors Housing Practice Leader, expressed enthusiasm about the survey’s release, stating, “This survey furnishes valuable insights into the investment prospects and hurdles that confront this sector. The findings of this year manifest greater market optimism than our 2023 report, spotlighting the seniors housing asset class as an exceptionally appealing investment opportunity, driven by the aging population.”
The survey dissected investment dynamics across various seniors housing property types, including active adult, independent living, assisted living, memory care, skilled nursing care, and Continuing Care Retirement Community/Life Plan Community (CCRC/LPC). Analysis was segmented by asset class and market quality, designating the top 50 U.S. markets as primary and all others as secondary.
Survey Highlights
- Flat or Compressed Cap Rates: Expectations are set for capitalization rates across all seniors housing care levels to either hold steady or contract in 2024, contrasting with the previous year’s anticipation of cap rate expansion.
- Accelerating Rental Rate Growth: A surge in rental rate growth across care levels is anticipated to persist in 2024, echoing post-pandemic trends. Over 90% of respondents foresee rental rate increases for property types excluding care in 2024, with assisted living and memory care sectors particularly expected to see growth between 5% and 10%.
- Active Adult Communities to Lead in Occupancy: Active adult communities are projected to achieve the highest stabilized occupancy rates in 2024. Conversely, skilled nursing facilities may experience the lowest occupancy rates, with CCRC/LPCs expected to exhibit the broadest variance in occupancy levels among care types.
- Rising Operating Costs: A significant majority of survey participants (81.7%) predict a 3.0% to 5.0% increase in operating expenses for the forthcoming year, marking a slight rise from the previous year’s forecasts.
About BBG: BBG stands at the forefront of commercial real estate services, offering valuation, advisory, assessment, and a plethora of other services across its 47 offices nationwide. With a client base exceeding 4,500, BBG prides itself on delivering personalized service, timely results, and industry-leading expertise. For more in-depth information, please visit BBG’s official platform.
The BBG seniors housing investor survey of 2024 illuminates a sector on the cusp of significant shifts, driven by demographic changes and evolving market conditions. These insights serve as a formidable tool for stakeholders, guiding strategic decisions in navigating this complex investment landscape.
