Forty-eight percent of the senior housing real estate professionals and investors responding to a recent survey predict rental rate increases of 3 to 7% over the next 12 months for active adult, independent living, assisted living and memory care communities.
The percentage among respondents to the 15th edition of CBRE’s Senior Housing & Care Investor Survey predicting increases of 3 to 7% was down from 63% in the previous survey. Results for the second half of 2024 were released Tuesday.
The October CBRE survey polled the same group of senior housing professionals as were queried for an April survey. Unlike the April survey, where the consensus was rental rate increases of 3% over the next 12 months, this survey produced no clear consensus, CBRE said.
When asked whether they expected rent growth of 7% or more, 5.3% of participants predicted it for the memory care segment, with no respondents predicting the same level of rent growth for active adult, independent living, assisted living or CCRCs.
Of other senior living sectors, predictions about rent increases of 3 to 7% ranged from 38.9% of participants for CCRCs to 42.1% of respondents for active adult. Predictions about rent increases of 1 to 3% ranged from 26.3% of participants for both independent living and memory care to 44.4% of respondents for CCRCs.
Respondents predicting flat rent growth ranged from 15% for assisted living to 26.3% for active adult.
No participants said they expect rent decreases for any asset class in senior living (as opposed to skilled nursing, where a decrease of 1 to 3% was forecast by 6.3% of respondents), whereas the number of participants expecting no change in rental rates increased to 20% in October, up from close to zero in April.
Another change from April was in underwriting rent growth. The percentage of respondents reporting underwriting rent growth of more than 7% fell to zero in October, down from 12% in April.
By comparison, the Urban Land Institute recently predicted rental rate growth of 5% in 2024 and 2025 for senior housing, and then 5.3% in 2026 — higher than the 15-year average of 2.9%.
In the Fall 2024 ULI Real Estate Economic Forecast, ULI forecast no changes in rental rates for senior housing for 2026, with predictions that senior housing will perform better than the long-term averages.
For additional coverage of the CBRE survey results, see the McKnight’s Business Daily.