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**Aging Baby Boomers and the Impact on Commercial Real Estate**
As the Baby Boomer generation (those born between 1946 and 1964) continues to age, demographic trends are increasingly influencing various sectors of the economy—particularly commercial real estate.
According to the U.S. Census Bureau:
– The U.S. population aged 65 and older grew by 3.1% from 2023 to 2024, reaching 61.2 million people.
– In 2004, individuals aged 65 and older represented 12.4% of the population. By 2024, that share had increased to 18.0%.
This year alone, approximately 73 million Boomers will be age 65 or older, comprising more than one-fifth of the U.S. population, according to Bankers Life.
A recent report from Marcus & Millichap highlights the significant implications of this demographic shift for the commercial real estate sector.
**Rising Demand for Senior Housing**
As the population continues to age, demand for various types of senior housing—such as independent living, memory care, and continuing care communities—is expected to increase sharply. According to NIC MAP, leveraging Census Bureau data, the number of individuals aged 80 and older is projected to grow:
– By 3.4% to 14.7 million in 2024,
– By 16.6% by 2028, and
– By nearly 28% by 2030.
By 2035, this age group is projected to grow by over 55%, from 14.7 million to nearly 23 million.
To meet this expanding demand, the industry will require approximately 600,000 additional senior housing units over the next five years. However, construction has not kept pace. During the peak of the last senior housing construction cycle in 2019, only 60,000 units were completed. This growing imbalance between demand and supply is expected to result in higher occupancy rates and rental growth. At the same time, the sector continues to struggle with labor shortages.
**Growth in Demand for Medical Office Buildings (MOBs)**
In tandem with the increased demand for senior housing is a rise in healthcare service needs, driving demand for medical office space. Marcus & Millichap notes that as healthcare demands surge, vacancy rates for medical office buildings are expected to decrease while rents rise.
In 2024, 8.4 million square feet of medical office space came online, with an average vacancy rate of 9%. However, a persistent shortage of doctors and healthcare personnel poses a challenge in meeting future service requirements.
Reflecting this healthcare boom, roughly one-third of net U.S. job creation through August of this year occurred in the healthcare sector.
The aging of the Baby Boomer population is more than a demographic trend—it is a driving force reshaping senior living, healthcare services, and the broader commercial real estate landscape in the United States.
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