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The senior living industry’s best-ever period of occupancy, margins and revenue growth is right in front of it in 2025.
This was the prevailing sentiment that I took away from the recent American Seniors Housing Association (ASHA) conference, where optimism abounded amid talk of surging occupancy and margins, the likes of which have not been seen in a long time. Recent reports from Green Street Advisors and NIC similarly paint a picture of massive opportunity and a coming period of strong performance.
But while there was palpable excitement for the future at ASHA, lessons from the past also cast a shadow. The Great Financial Crisis in late 2007 and 2008 was a period in which many senior living operators wish they would have been bolder, knowing what they know now. In 2025, the senior living industry is approaching a similar period – and this time around, the opportunity might be even greater. Anyone analyzing the market has known for years that demographically-driven demand would be due to hit, but the opportunity created by that demand has been super-charged by the events of the last few years, which have paired rising demand with a drop-off in new inventory.
Last year, senior living construction starts reached a low not seen since the financial crisis in 2008. Although operators in 2025 are challenged to grow via new development for a new generation of older adults, the silver lining to that challenge is that persistent low supply will almost surely lead to occupancy gains across the board in the coming months.
At the same time, the amount of demand ahead is also now much greater than it was more than a decade ago. In the five years after the Great Financial Crisis, the population of people aged 80 and older in the U.S. grew 4%, according to a stat recently cited by Ventas (NYSE: VTR) Executive Vice President of Senior Living Justin Hutchens. Between now and 2030, the population of people aged 80 and older is expected to grow 27%.
In other words, the senior living industry has perhaps never had such a good opportunity in front of it as it does now in which to grow occupancy, margins and NOI.
That was also my impression after meeting with operators and attending sessions at the ASHA conference in Phoenix last week. I think Cogir USA CEO Dave Eskenazy summed it up best when he told me that the current slowdown in new supply represents a moment of relief for senior living operators who need to catch up.
“There’s a lot of optimism on behalf of the operators, because I think we can see the light now at the end of the tunnel,” he said.
The flip side of that opportunity is that, just like in 2008, companies risk missing out on this demand if they don’t grow and evolve to meet it.
In this members-only SHN+ Update, I analyze NIC and Green Street data along with my recent meetings and sessions from the ASHA conference and offer the following takeaways:
- Data and trends showing the senior living industry’s opportunity is indeed massive
- How operators are gearing up to capture that opportunity
- Why the industry could be trading short-term success for problems down the road if operators don’t figure out a way to grow
Taking occupancy to 90% and beyond
If the years after the Great Financial Crisis were like a semi-final playoff game for the senior living industry, 2025 and the years to follow may well be the Super Bowl. One needs only look through historical NIC data to see what the industry has to look forward to in the next few years.
Between 2006 and 2009, inventory growth exceeded absorption. Then, as challenges developing and building caused the number of new communities coming online to dwindle, absorption of units began to exceed new inventory. As a result, occupancy rose between 2009 and 2014.
Between about 2014 and 2020, the senior living industry entered into another period where new inventory eclipsed absorption, and occupancy declined accordingly, NIC MAP data shows. In 2020, absorption plummeted with the arrival of Covid-19. But absorption has far surpassed inventory growth in the last few years.
As of NIC MAP’s most recent tally, construction had fallen to the lowest levels since the first quarter of 2014, while the industry’s total number of occupied units reached a new high watermark. And in 2024, four of the 31 primary markets NIC MAP tracks reported no current senior living construction projects, an increase over just one such market in 2023.
Comparing the period after the Great Financial Crisis and now, the senior living industry is in a much better position to regain occupancy. And indeed, occupancy is surging right now – in 2024 alone, occupancy increased 2.2 percentage points, landing at 87.2% by year’s end.
By the end of 2025, NIC MAP believes occupancy rates could exceed 90%, an event that has only happened “a handful of times” since the organization began tracking senior living occupancy data nearly 20 years ago.
Of course, as they say, hindsight is 20-20. And it’s obviously no secret that the industry faces a years-long demand runway ahead as the baby boomers arrive en masse.
In the coming year I do see that the senior living industry is approaching a truly unique opportunity in which to get on better financial footing via occupancy and margin gains – if operators move to take that opportunity. And to that end, I do see senior living companies gearing up to do all they can now to gain occupancy in the coming years, but also to set themselves up for continued success when market conditions eventually change.
‘Exceptionally good’ years ahead, but next cycle looms
According to a Jan. 30 Green Street report, accelerating demand, minimal supply should spell consistent occupancy gains through 2029, when the financial analysis firm expects average senior living occupancy to reach mid-90% levels of occupancy.
The report’s authors also noted that developers will resume building “once economics pencil,” but that they expect relatively limited supply growth of around 2% through 2028.
To Green Street, the industry’s glass is “three-fourths full” at the start of 2025.
“While every area of real estate comes with some risks, the positives are likely to outweigh the negatives for the senior housing industry in the near term as fundamentals remain strong due to the significant demand versus supply imbalance,” the report’s authors wrote. “Over the long-term, lower supply barriers and outsized cap-ex needs may weigh on returns relative to other areas of real estate.”
And demand is still in the “early innings,” with years left to play out ahead.
“The senior housing industry is now in the beginning stages of a massive demand tailwind, largely driven by a sharp acceleration in the elderly population,” the Green Street report reads. “The growth in 80+ year-olds is expected to decelerate throughout the 2030s but largely remain north of 3%, which suggests a sustained runway of demand for all forms of senior housing as long as consumer preferences to live in a senior care facility remains intact.”
Operators can also feel the wind at their back. For example, Legend Senior Living CEO Tim Buchanan told me at ASHA he sees “a field of opportunity right now” given the industry’s current supply and demand profile.
“The next few years are going to be, I think, exceptionally good, because of the limit of new construction, and absorption will follow,” he told me.
But he added that the cycle “won’t last forever,” and thus it is important for operators to be “out in front of it and able to capitalize on the opportunities that come our way.”
Similarly, Cogir’s Eskenazy sees the industry returning to a “sense of normalcy” with regard to occupancy and demand in the coming years.
Both Legend and Cogir have grown alongside larger partners in recent years, including through management contracts with owners including Welltower (NYSE: WELL). And that is where both companies are focusing their fire for now as new development remains tough. Legend, for example, has added 21 communities to its portfolio through management opportunities since 2023, while Cogir has nearly doubled its portfolio in the U.S. since merging with Cadence Living in 2022.
On that front, there seem to be even more opportunities to work with owners including Welltower, with such firms implementing new ways of deploying capital as investor interest in senior living grows. Last week, Welltower announced the launch of a new private funds management business, which is acquiring NorthStar Healthcare Income and 40 communities in a $900 million transaction. And as CEO Shankh Mitra has pointed out in the past, the company is always searching for new operating partners to steward good results in its growing number of communities.
Yet, it is striking to me that the senior living industry is still essentially trading the same communities among operators, at least in the short term. I think that if current trends hold, operators will return to more healthy occupancy and revenue profiles provided they can attract the next generation of older adults. But they may be selling themselves short for the next real estate cycle if they don’t also find ways to grow now before another development boom comes.
“The optimism and great opportunity will be a cycle,” Buchanan said. “If you look out 10 years, there’s probably going to be another big development cycle.”
Again, I think about what senior living companies tell me they wish they had done in the years after 2007 and 2008. Successful companies moved the ball forward with creative new concepts and models and reaped the benefits.
As I noted a few weeks ago, I think the senior living industry has another big opportunity ahead to be more creative and develop new models, including in sectors like home health, PACE and the middle-market. But just like the five years after the Great Recession, that will require companies to take risks and press through a cloud of uncertainty about the road ahead.
