**Aging Baby Boomers Drive Demand for Senior Housing and Medical Office Space**
It’s no secret that the Baby Boomer generation—those born between 1946 and 1964—is getting older, and the effects of this demographic shift are being felt across the U.S. economy, especially in the commercial real estate sector.
According to the U.S. Census Bureau:
– The population of Americans aged 65 and older grew by 3.1% from 2023 to 2024, reaching 61.2 million.
– The proportion of this age group in the overall U.S. population increased from 12.4% in 2004 to 18.0% in 2024.
This year, approximately 73 million Baby Boomers are aged 65 or older, making up more than one-fifth of the U.S. population, according to Bankers Life.
A recent report by Marcus & Millichap examined how this demographic evolution is creating significant opportunities and challenges within commercial real estate—particularly in senior housing and healthcare real estate.
**High Demand for Senior Housing**
The demand for senior living options—including independent living, memory care, and continuing care properties—is expected to rise dramatically. This trend is driven by the growth of the senior population, particularly those aged 80 and older.
NIC MAP data projects that the 80+ population will grow by 3.4% in 2024, totaling 14.7 million, with further increases of 16.6% by 2028 and nearly 28% by 2030. By 2035, that number could reach close to 23 million—an overall growth rate of more than 55% in just a decade.
To accommodate this explosion in demand, an estimated 600,000 new senior housing units will be needed over the next five years. However, construction has not kept pace. For comparison, only 60,000 units were delivered at the height of the last senior housing construction cycle in 2019.
This supply-demand imbalance is driving higher occupancy levels and rent growth in the sector. Labor shortages continue to pose a significant challenge for operators, particularly in staffing and caregiving roles.
**Rising Need for Medical Office Buildings (MOB)**
An older population also requires more healthcare services, leading to increased demand for medical office buildings (MOB). Marcus & Millichap noted that this surge in healthcare requirements is pushing vacancy rates for MOBs downward while supporting rent growth.
In 2024 alone, the market saw 8.4 million square feet of medical office space delivered. Despite this, the average vacancy rate for MOBs remains relatively low at 9%, indicating robust demand.
However, the healthcare system faces further challenges—including a shortage of doctors and medical personnel to meet rising service needs. The Marcus & Millichap report underscored that about one-third of net job creation in the U.S. over the past year (ending in August 2024) occurred in the healthcare sector, underscoring the sector’s growing importance and strain.
**Looking Ahead**
As America’s population continues to age, demand for senior housing and healthcare facilities is expected to intensify. Developers, investors, and healthcare providers will need to respond with strategic planning and investment to meet the needs of this expanding demographic and ensure adequate living and medical care infrastructure is in place.
