BBG Seniors Housing Investor Survey Reveals Key Market Trends in 2024

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Mar 05, 2024, 08:44 ET

DALLAS, March 5, 2024 /PRNewswire/ -- BBG, the nation's largest independent commercial real estate services firm, today released its second annual U.S. seniors housing investor survey. This comprehensive report offers valuable insights from prominent market professionals on critical trends anticipated to shape this dynamic alternative asset class in 2024.

R.J. DeBee III, BBG Managing Director and National Seniors Housing Practice Leader

Conducted in January 2024, the survey garnered crucial insights from key players across the U.S. seniors housing market, including major investors, developers, lenders, and brokers. It delves into critical areas projected to impact the sector, including capitalization and rental rates, stabilized occupancy, operating expenses, and other key market performance metrics.

The survey's key takeaways include a combination of expected capitalization rate compression, increasing transaction volume, and decreasing interest rates.

R.J. DeBee III, Managing Director and National Seniors Housing Practice Leader, commented on the survey: "We are excited to release our annual seniors housing investor survey. This survey provides valuable insights on the investment opportunities and challenges currently facing this sector. Many of the findings this year show more market optimism than was discovered in our 2023 report. The aging population makes this asset class a highly attractive investment option."

Seniors housing property types analyzed in the survey include active adult, independent living, assisted living, memory care, skilled nursing care, and Continuing Care Retirement Community/Life Plan Community (CCRC/LPC). Survey results were analyzed by asset class and market quality with primary markets identified as the top 50 markets within the United States, while secondary markets encompass the remaining markets.

Highlights of the survey include:

Cap Rates Projected to Remain Flat or Compress: Capitalization rates for all seniors housing care levels are expected to remain flat or decrease in 2024. Last year in 2023, the market was anticipating and underwriting cap rate expansion.
Higher Rental Rate Growth Projected: Rental rate growth for all care levels is expected to continue to increase significantly in 2024, consistent with the trends in the post-pandemic environment. Over 90% of respondents are expecting rental rate growth in 2024 for property types excluding care. For Assisted Living and Memory Care, the most frequent projection was for growth between 5% and 10%, with more than half (52%) of respondents anticipating increases exceeding 5% in 2024.
Active Adult Leads Stabilized Occupancy: Respondents predict active adult communities will have the highest stabilized occupancy in 2024 while skilled nursing facilities are anticipated to have the lowest rate. The survey also showed that CCRC/LPC is expected to have the largest spread in stabilized occupancy compared to other care levels.
Operating Expenses on The Rise, Margins Under Pressure: A majority of the respondents (81.7%) indicated operating expenses are expected to increase by 3.0% to 5.0% in the coming year (2024) compared to (77.5%) in 2023.

About BBG
BBG's commercial real estate services include valuation, advisory, assessment, desktop evaluation, energy services, cost segregation, zoning, and ALTA surveys. Headquartered in Dallas, the firm has 47 offices in key US markets and serves more than 4,500+clients. As one of the Big Five national commercial real estate valuation firms, BBG has achieved a reputation for personal attention, on-time delivery, and deep expertise. For more information about BBG, please visit www.bbgres.com.

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SOURCE BBG