It isn’t news that the Baby Boomer cohort (those born between 1946 and 1964) is getting older. The U.S. Census Bureau offers all kinds of facts about this, including:
- The U.S. population age 65 and older increased by 3.1% to 61.2 million from 2023 to 2024
- The share of the 65-and-older population increased from 12.4% in 2004 to 18.0% in 2024
Meanwhile, Bankers Life pointed out that this year, approximately 73 million Boomers will be 65 and older, “making up more than a fifth of the U.S. population.”
A recent Marcus & Millichap brief explained how the growth of this aging population could impact commercial real estate.
An Increase in Senior Housing Demand
“The demand for senior housing, including independent living, memory care facilities and continuing care properties, could rise dramatically,” the brief said.
The NIC MAP, citing information from the Census Bureau, estimates that the population aged 80 years and older is projected to increase by 3.4% to 14.7 million in 2024, with potential growth of 16.6% by 2028 and nearly 28% by 2030. “ By 2035, in just ten short years, our 80+ population will increase from 14.7 million to nearly 23 million, a growth rate of over 55%,” according to NIC MAP.
On the senior living front, this growth means an additional 600,000 units will need to be constructed and come online over the next five years. However, “during the peak of the last senior housing construction cycle in 2019, only 60,000 units were completed,” the Marcus & Millichap write-up said.
The growing demand and limited supply result in higher occupancy and rent growth. Additionally, labor shortages are a problem.
And Increased Demand for MOB
An aging population increase correlates with a higher need for healthcare services. Marcus & Millichap explained that “the influx of medical care needs should ultimately drive additional demand for medical office space. This will result in shrinking medical office vacancy rates, as well as a boost to rent growth.”
The report noted that 8.4 million square feet of medical office space came online in 2024, with the average vacancy rate at 9%. Additionally, a shortage of doctors and medical personnel remains, which could be problematic in meeting the growing demand.
“Partially reflecting this dynamic, roughly a third of net U.S. job creation over the past year ended in August was in health care,” the Marcus & Millichap report said.
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