By Hayden Spiess
CHICAGO — New players are increasingly drawn to the seniors housing sector due to strong market fundamentals and the industry’s proven performance. Limited new inventory and high occupancies, along with a robust population of aging individuals and rent growth, are generating healthy returns for investors.
“The fundamentals have never been stronger,” says Tom Errath, managing director and head of research at Harrison Street Asset Management (HSAM).
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HSAM itself is no new player when it comes to senior living. The firm has acquired over $15 billion worth of seniors housing assets since its inception in 2005. In the past 18 months alone, HSAM has sold $3 billion and acquired $2 billion of assets within the sector.
Seniors housing is the firm’s “highest-conviction [sector] right now,” states Errath.
His comments came during the keynote session at the InterFace Seniors Housing Midwest conference on June 24. Held at the Embassy Suites Magnificent Mile hotel, the annual event drew approximately 200 attendees.
Errath was joined onstage by his colleague Rob Korslin, senior managing director and co-head of North America Transactions at HSAM and session moderator Richard Kelley, publisher of Seniors Housing Business.
Korslin and Errath observed that the commercial real estate industry at large seems to share HSAM’s enthusiasm for the senior living sector. As a result, merger and acquisition activity is robust and gaining momentum.
“Transaction activity in the first quarter of this year was $10 billion,” noted Korslin, pointing out that this deal volume far outpaces the level of activity during the same period two years ago. According to NIC, transaction volume for the sector hit nearly $27 billion in 2025, up from $17.3 billion in 2024.
The keynote speakers predicted that this trajectory will continue, even as development restarts.
Frothiness
Early in the conversation, Korslin offered a candid read on where capital is flowing. Institutional interest in senior living, he noted, has concentrated heavily around newer vintage, stabilized assets, and that concentration has pushed pricing in the segment in a short period of time. He acknowledged that by any objective measure, that corner of the market has gotten frothy.
“I have been investing in commercial real estate for close to 15 years now,” he shared. “I’ve gotten a ‘Spidey sense’ on market frothiness.”
But the demand driving it is difficult to argue with. In his view, senior living boasts the most compelling supply-demand setup in commercial real estate.“Our core fund, which owns a trophy portfolio of seniors housing assets around the country, saw 16 percent growth in same-store net operating income in the first quarter,” shared Korslin. “It’s pretty tough to make a bear case on the demand side.”
According to the National Investment Center for Seniors Housing & Care (NIC), seniors housing occupancy nationally reached 89.5 percent in the first quarter of 2026, marking the 19th consecutive quarter of occupancy rate increases.
“We’re seeing demand for 50,000 units a year nationally, and we’re delivering 16,000 or 17,000 units,” said Errath, referring to the supply/demand imbalance nationally.
Other entities, including REITs, have increasingly taken notice of the strong consumer demand for seniors housing. This has generated an increased appetite for investing in properties and contributing to the uptick in acquisitions and dispositions. “Everybody now is chasing seniors housing,” said Korslin.
Kelley asked the HSAM executives about the “100-pound gorillas” — publicly-traded companies like Welltower, Ventas and the newly formed Janus Living (NYSE: JAN), a seniors housing REIT created by Healthpeak Properties. “How do they impact things?” he posed.
Korslin confirmed that HSAM has sold portfolios to REITs. He added that contrary to feeling threatened by other players in the seniors housing sector, his firm sees enthusiasm from other investors as beneficial.
“It’s great to have that public investment in this space,” he says. “At a macro basis, we’re likely going to be undersupplied in a very acute way in a short time, so more institutional capital flowing into the space is good for everybody.”
Executing Deals with Discipline
Both Korslin and Errath cautioned that despite seniors housing’s positive real estate fundamentals and tailwinds, new investors should not enter the space blindly.
“In our 20 years of experience and close to 400 assets in our history, we’ve learned a lot of lessons,” pointed out Korslin. “It’s still a very operationally intense business, more so than any other real estate class.”
For this reason, the keynote speakers said it is paramount that owners be prudent when selecting operators.
“A lot of our key operating partners are ones we’ve worked with for 10 or 15 years,” said Errath “and we very carefully bring one or two [operators] on every couple of years. We’re bringing a new one on right now.”
HSAM exhibits a similar level of judiciousness when pursuing acquisition opportunities, preferring high-barrier-to-entry and high-income markets.
“Our screening is based on very specific metrics that, from a market perspective, have correlated to success in our track record,” outlined Korslin. “As a result, we focus on typically affluent [markets], where there is pricing power and real supply barriers.”
That same discretion is also applied to HSAM’s development projects, which the executives said have continued despite high construction costs and expensive financing.
In markets that meet its investment criteria, Harrison Street Asset Management has acquired or developed more than 20 percent of the institutional projects since 2019, according to Korslin.
“We intend to continue to be a consistent provider of development in seniors housing,” he continued. “From 2025 through the end of this year, we will probably have gone vertical on 10 to 15 projects, so we’re very active today.”
Errath and Korslin predict that construction activity will continue to increase over the next few years.
“People are starting to buy assets above replacement cost, so that’s a green light for the development pipeline,” Korslin observed.
Even as the pace of development begins to pick up, the two HSAM executives do not anticipate that an uptick in new supply will put a damper on merger and acquisition activity, at least for the foreseeable future.
“We believe the demand for senior housing investment is going to continue to outweigh the supply of opportunities out there,” forecasts Korslin. “Next year, I think we’re going to be in the same spot or even more optimistic.”