Senior housing outlook sends clear message: Build now!

Senior housing market is heating up

The senior housing sector is once again gaining ground — and quickly. Recent data points to strong, sustained demand, resilient rent growth, and occupancy rates that continue to climb. For developers and investors in the Upper Midwest, the opportunity window is opening wide.

A supply-demand mismatch that favors developers

According to the National Investment Center for Seniors Housing & Care, U.S. senior housing occupancy reached 87.4% in Q1 2025 — the highest since early 2020. That marked the 17th straight quarter of occupancy gains, with net absorption now outpacing new inventory by more than 2.5 to 1.

At the same time, construction starts remain well below pre-pandemic levels. With the 80+ population set to grow more than 35% in the next decade, experts forecast a shortfall of 564,000 units by 2030. In other words, supply isn’t catching up to the demand — and that spells opportunity for those ready to develop.

Upper Midwest strength: Solid rents, stronger demand

While national trends are promising, the Upper Midwest is showing especially strong fundamentals. Multifamily occupancy in the region exceeds 95%, with rent growth averaging approximately 2.4% year-over-year. In senior housing, occupancy levels in many Midwestern secondary markets are on par with or exceeding national averages, yet new development remains limited.

This makes the region fertile ground for right-sized, thoughtfully located communities — particularly in areas like La Crosse, Madison, Rochester, and the Twin Cities suburbs.

Investors are paying attention

CBRE’s 2025 Senior Housing Investor Survey revealed rising confidence across the board, with 65% of respondents expecting rental rate increases of 3–7% in the coming year. Interest is especially high in independent living and assisted living segments, which are drawing both institutional and private capital.

Though high interest rates and construction costs have slowed some projects, stabilized assets and well-planned developments remain attractive. Investors are increasingly looking at acquisitions and value-add conversions of older properties as lower-risk alternatives to new builds — particularly where demand is already proven.

Design for today’s senior — and tomorrow’s

At DBS Group and Community Living Solutions, we’ve seen firsthand how market conditions are influencing design and construction decisions. Successful communities in today’s market tend to focus on:

• Scalable footprints with flexible common areas.
• Right-sized units that meet market affordability thresholds.
• Proximity to healthcare, shopping, and family.
• Amenities that support wellness, socialization, and aging in place.

Whether it’s a ground-up build or a strategic conversion, early planning and regional insight are key to aligning project outcomes with resident expectations and investor goals.

Where we see opportunity

These areas represent the intersection of market demand, financial feasibility, and operational viability.

• Underserved secondary markets — Underserved secondary markets often have aging populations with limited housing options, making them ripe for new development.
• Acquisition and rehab — Older communities with good bones and strong market fit. Acquisition and rehab projects can deliver faster returns by reducing lead times and capitalizing on existing infrastructure.
• Smarter capital stacks — Creative financing strategies to navigate rate pressure. In today’s financing environment, a smarter capital stack can help control costs, unlock value, and reduce risk.
• Integrated planning and delivery — With a fully integrated team from concept through completion, this approach strengthens collaboration among everyone involved in planning and operations, provides budget certainty, prevents schedule delays, and ensures alignment on resident needs, regulations, and long-term performance.

Where it all leads

Demand is strong. Inventory is tight. And demographic tailwinds aren’t slowing down. For those exploring new senior housing developments — or looking to revitalize existing communities — the current market offers optimism, along with a clear path forward.

Ready to explore what’s possible in your market? Let’s talk.