Assisted living is the area of senior living and care that will provide the greatest opportunity for investment in 2026, according to respondents to a recent survey by commercial real estate company Cushman & Wakefield. Forty-five percent of participants, the highest percentage identifying any property type, selected assisted living as the place to put money this year.
Twenty-six percent of respondents picked active adult, 13% rated independent living as a good investment opportunity, 6% highlighted continuing care / life place communities, 5% chose stand-alone memory care, and the same percentage, 5%, chose skilled nursing.
Cushman & Wakefield released the report Friday, based on a survey of more than 75 senior living and care market leaders.
Seventy-one percent of participants said they expect capitalization rates to decrease through 2026. A year ago, 33% of respondents said they expected cap rate compression in 2025.
The report also noted that senior living and care market fundamentals continued to trend in a positive direction in the second half of 2025, posting 20 straight quarters of stabilized occupancy growth in December.
Overall occupancy reached 90% in the fourth quarter, marking the highest level since 2017, the authors said, but at the same time, the sector faces an inventory shortage.
“Secular tailwinds are stronger than ever. To meet market demand at peak levels, supply must increase by roughly 70,000 units per year between now and 2036. With less than 6,000 units delivered in 2025, the sector is facing a massive shortfall in housing and care for our senior population,” the report stated.
Net absorption outpaced supply growth by 4.8 to 1 in 2025, and construction starts fell to near historic lows, reaching the lowest level since 2012, at 2.3% of inventory.
Valuations across the sector experienced “significant recovery” last year, according to the report, as cap rates compressed by 25 to 50 basis points.
“Compared to other property types, senior living capitalization rates trended much more aligned with the treasury (rising interest rates), leaving senior living capitalization rates with more room for compression moving into 2026, another positive datapoint for the sector,” Cushman & Wakefield said.
Operating margins saw improvement in 2025 through platform consolidation, technology adoption and a slight softening in the labor markets, according to the report
Transaction volume in the fourth quarter was up more than 50% over the previous quarter and 30% compared with the fourth quarter of 2024. The majority of investments came from real estate investment trusts, and “the renewed optimism is bringing institutional investors back to the table,” Cushman & Wakefield said.
