Why Investors Should be Optimistic About Senior Housing Right Now
We recently shared data that newly developed senior housing properties are opening with premium rents (about 20% higher than the average, and sometimes even 30%). This raised questions about leasing success trends that we wanted to explore further:
- Could these new communities lease up successfully at such premiums?
- Would prospective residents absorb these rates?
- Was the model sustainable?
In this follow-up, we share how NIC MAP’s proprietary data reveals a resoundingly optimistic response, offering crucial insight into the current trends and risks senior living investment professionals must consider.
Properties are Filling Fast—Even at Premium Rates
Between 2022 and 2024, we tracked over 200 newly opened senior housing properties across Primary and Secondary U.S. markets, focusing specifically on those where average monthly rents exceeded the local market average for their respective property types.
For each community, we observed occupancy growth quarter over quarter and analyzed the median fill pattern. The results, seen in the chart below, clearly suggest an optimistic narrative.
The chart groups communities by how much higher their rents were compared to market averages: 1%–19%, 20%–49%, and 50%+ above market. Despite differences in premium, all three groups exhibit strong occupancy trends over their first eight quarters of operation.
In other words, demand remained strong regardless of how far above market rents were set.
After being open for a year (four quarters after opening), median occupancy across these communities reached 51%. By the sixth quarter, that figure climbed to 65%, and by the eighth, 74%.
This means that these buildings, even with premiums far above their markets, were half-full within a year, two-thirds full within a year and a half, and three-quarters full within two years.
As the chart shows, properties that opened with rents closer to market (1%–19% above) filled fastest, reaching 78% occupancy by Q8. However, even those priced 50%+ above the market still achieved a 70% median occupancy by their second year. This finding upends a common assumption: that senior housing priced at ultra-premium levels would be slow to lease.
Anecdotal Evidence Tells the Same Story
Real-world examples illustrate the narrative seen in the macro trends. These three communities opened with extraordinary rent premiums but still achieved strong lease-up results.
- In a Pacific Market, a Majority Assisted Living community that opened a few years ago set a remarkable benchmark. With an average monthly rent of more than three times the average local Majority Assisted Living rent, the project might have seemed financially risky. Yet, by 18 months it was 75% occupied—and by the two-year mark, it was nearing full occupancy.
- In the Mid-Atlantic region, a Majority Independent Living community opened recently with rents nearly double the metro’s average. Just nine months in, it had already surpassed 50% occupancy, exhibiting strong demand.
- And in the Southeast, a Majority Assisted Living property opened a few years ago with rents more than twice the local average. Still, its performance closely followed the broader median trendline: half-filled by year one, two-thirds by 18 months, and over 95% occupied by year two.
3 Senior Housing Investment Myths to Reconsider
These insights expose three myths the market needs to reconsider to properly evaluate the current trends and risks senior living investment professionals face.
Myth 1: Premium Pricing is a Barrier
- Premium pricing is clearly not a barrier to successful lease-up. It’s a viable strategy. The conventional narrative that higher rents scare off consumers is increasingly misaligned with market behavior. Today’s senior housing resident is asset-rich, financially flexible, and looking for experiences that reflect lifestyle and quality—not simply a price point. These strong lease-up trends indicate that high demand is meeting new supply, even when pricing is significantly above market.
Myth 2: Lease-Up Timing is Uncertain
- Lease-up timelines, even at higher premiums, are predictable. Developers can now benchmark real-world absorption curves showing that 50% occupancy within 12 months is typical, rather than just a possibility. Sales and marketing teams can calibrate their ramp-up accordingly. For capital providers, this data reduces perceived risk and brings clarity to underwriting.
Myth 3: Financing New Communities in a High-Interest-Rate Environment is Risky
- Today’s conservative underwriting assumptions are built for a different era, often relying on 10%–15% rent premiums, 3% annual rent growth, and three-year lease-up windows. But current data tells us that many communities are not only achieving higher rent premiums, they’re also stabilizing quickly.
This exposes a misalignment in the current capital markets. Even as demand surges and leasing data exhibits strong success, new development has dramatically declined at a time when it needs to accelerate.
This moment offers an inflection point. There is a widening disconnect between demand and supply. Occupancy across stabilized properties continues to rise. NIC MAP data shows that many high-rent communities are successfully leasing up despite elevated starting rents—rents that, in today’s capital environment, are often viewed as difficult to underwrite. This dynamic is especially important in a period where the cost of capital and construction has made feasibility challenging, and where underwriting assumptions may be out of sync with current market behavior.
Rethink What’s Achievable
For investors, this is a time to recalibrate while continuing to move forward. Developers who start now can claim a larger share of unmet demand with less competition. Communities that open within the next two to three years may be well-positioned to capitalize on a window of heightened demand and constrained supply.
NIC MAP tracks 140 metro markets nationwide—and according to our 2Q25 data release, an astonishing 58% of those metros currently have zero new senior housing development projects underway. Even more striking, absorption rates in these same markets are trending between 2.5% and 3.0% annually, showing clear signs of growing demand amid no immediate supply growth.
Another 21% of markets have just one project, compared to only 10% with four or more active developments. In fact, over 30% of all senior housing development projects are taking place in just five metro areas.
When investors and developers deliver a well-positioned product—paired with the right operator, in the right market—the result can be strong lease-up performance at premium rents. If you are passing on your next project due to premium rents to market, now may be a good time to revisit the assumptions of trends and risks senior living investment presents.
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