The senior living industry sits at an important crossroads between challenges and opportunity in 2025. What operators do now could mean the difference between success and failure in the coming years.
On the one hand, the industry is still shaking off a few lingering woes from its ordeal during the Covid-19 pandemic, with many companies still looking to make up lost margins and revenue even after reaching pre-2020 occupancy rates. On the other hand, senior living operators are staring down a years-long demand runway in the form of the baby boomer generation – and meeting that demand will require creativity compared with the past.
As operators grapple with operational pain points that include higher expenses, accelerating “talent wars” and maintaining quality, they are also growing larger and evolving services to meet incoming demand and resident preferences.
In 2025, senior living companies have put many aspects of the business under a spotlight with an eye on change, from third-party referrals to community ownership and operator incentives. New models and methods are being tested now that could give certain companies an edge over their competitors, but growth via new development remains difficult to achieve with the current state of financing for new projects.
At the same time, the U.S. itself is also in a period of change, with a new administration about to take the reins in Washington, D.C. The prospect of immigration reform, once a top industry hope to alleviate staffing shortages, seems dimmer now than it did any time in the last four years. Meanwhile, the prospect of tariffs could toss senior living companies back into a state of uncertainty about the future if they create new headwinds for growth.
For operators, the upcoming year will be full of opportunities – and potentially chaos if they do not stay nimble in the face of new challenges.
Third-party referral sites lose some gravitational pull
For years, third-party referral sites like A Place for Mom (APFM) and Caring.com have loomed large over the senior living sales and marketing process, for the simple fact that an outsized number of leads flow from them to operators. In 2025, the balance is shifting, and third-party referral partners are losing some of their gravitational pull over the senior living sales process – though they are making moves to try and maintain their influence.
In 2024, two prominent senior living companies, Brookdale Senior Living (NYSE: BKD) and Sonida Senior Living (NYSE: SNDA) pivoted away from relying on third-party referrals and toward marketing strategies that prioritize in-house strategies, and they surely are not the only providers making such efforts.
Such moves are hardly surprising. For years, senior living providers have talked about trying to limit their dependence on third-party referrals. But changes to Google’s algorithm bring renewed energy to this trend in 2025.
Baier noted this year that the web search company now “deprioritizes” third-party content, leading to third-party referrals netting fewer organic leads organically. Google noted in an August search engine update that it was seeking to show “more content that people find genuinely useful and less content that feels like it was made just to perform well on search.”
Of course, there’s also the fact that senior living operators are keen to bring prospective residents to their websites, given that is the most effective use of their marketing dollars. As Sonida CEO Brandon Ribar pointed out, operators can sometimes receive leads from two or even more referral partners, sometimes after they have already obtained those same leads on their own.
That isn’t to say APFM and other similar companies will be shut out of the senior living sales and marketing process. Already, APFM has responded to these pressures by trying to move closer to operators, including by hiring former Harmony Senior Services CEO Margaret Cabell and launching newer, more operator-friendly initiatives.
Still, with the force of their gravity weakened, more senior living operators in 2025 will be able to define the shape of their own orbits when it comes to sales and marketing.
REITs go on a SHOPping spree
In 2024, REITs enjoyed some of the most favorable conditions they’ve experienced in many years. In 2025, senior living REITs will continue to press their advantage and go on a SHOP-ing spree – that is, increase the size of their senior housing operating (SHOP) portfolios.
That enthusiasm can be seen in companies like LTC Properties (NYSE: LTC), which is a new “convert” to the RIDEA ownership and management model. The REIT is starting its RIDEA conversions with operating partners not currently under fixed rent agreements or ones that have a shorter lease maturity duration. Looking ahead, the company has outlined $150 million to $200 million in RIDEA conversions across “multiple operators.”
More recently, Chicago-based REIT Ventas (NYSE: VTR) outlined plans to convert 44 communities managed by Brookdale under a current triple-net lease to other operators in its SHOP segment in what EVP of Senior Housing Justin Hutchens called a “unique opportunity.”
“You wouldn’t be able to buy something of this size, of this quality, in today’s market,” Hutchens told Senior Housing News. “So, to be able to take it from triple-net to SHOP is a unique opportunity.”
I don’t think REITs are being haphazard in these conversions, and operators are often eager to sign on to agreements that promise them more skin in the game. But like going on a shopping run at a clothing store, I do think REITs put a lot of items in their SHOP baskets in 2024. While the SHOPping spree will continue in 2025, REITs also must sort through what they have in their basket. Time will tell regarding whether all of their operating partners are good at RIDEA management structures – and potentially there may be some returns down the road as REITs fine-tune their senior living portfolios.
A new administration revives some old issues on trade, immigration
From pondering potential mass deportations to the threat of tariffs, the senior living industry has been largely uncertain about the impact of incoming president Donald Trump’s second term. But uncertainty is the last thing that operators need right now given that the senior living industry must kick growth into a higher gear this year and beyond.
The incoming president promises to enact steep tariffs against other trade partners – such as China, Canada and Mexico – on his first day in office, potentially disrupting ongoing construction projects. Although Trump’s first round of tariffs in 2018 did not lead to disastrous economic effects, they did help increase the cost of lumber when they were put into place. Now, the president-elect is planning to enact even larger barriers to trade in 2025, leading some to worry whether the impact this time around could be more dire than the last.
Mass deportations of the kind that Trump has proposed could also further complicate new construction. Specific to senior living, the prospect of mass deportations also means waning hopes of large-scale U.S. immigration reform any time soon, depriving the industry of a source of new workers it desperately needs, especially during a time of growth.
One caveat is that Trump, along with backers such as Elon Musk, has publicly endorsed the H1-B visa program, but he has otherwise remained a loud critic of immigration in general. And the visa program falls short of the kinds of immigration reform that senior living industry associations such as Argentum, ASHA and LeadingAge have called for in the past.
In addition to all of this, public policy relating to senior living could become more complicated if longtime vaccine skeptic and health conspiracy theorist Robert F. Kennedy Jr. takes the reins of the Department of Health and Human Services (HHS), and Dr. Mehmet Oz becomes administrator of the Centers for Medicaid and Medicare Services (CMS).
While private-pay senior living operators aren’t typically subject to HHS or CMS regulations, many also relied on those agencies for evidence-based guidance during the Covid-19 pandemic and are exploring deeper use of government-linked payment sources like Medicare Advantage (MA) and Medicaid waivers. A new pandemic could throw the industry back into disarray, especially if there is lackluster direction from the federal government – and experts are closely watching the development of diseases like H5N1, also known as the “bird flu,” for signs they are spreading among humans, with “worrisome” early signs.
All this said, uncertainty will be replaced by increasing certainty over the course of 2025, as the new administration’s appointees take the reins and start to make policy. Many industry leaders are hoping and expecting some favorable moves for providers, such as the demise of the nursing home staffing mandate. But only time will tell what the cumulative effect of the second Trump will be for senior living.
The AI buzz wanes
For the last couple of years, the senior living industry has extolled the potential benefits of using artificial intelligence in operations to enhance staff efficiency, improve marketing and aid back-office business functions. Beyond that, some companies have had hopes of more automated sales processes, AI-powered tools that can assess and place residents in the best unit type possible without the help of humans, and even – one day – autonomous caregiver robots.
But in the couple of years of hype, AI still hasn’t lived up to its promise of revolutionizing everyday tasks, nor has it radically changed how senior living communities function. As I alluded to in my 2024 trend forecast, it seems the so-called AI revolution is always in sight but perpetually out of reach. 2025, I think its allure will fade without some kind of big leap forward.
That doesn’t mean AI will fall out of use. Senior living operators are right now using AI to detect falls among residents and analyze other kinds of data for new operating models. Consumers also are feeling some fatigue and worry regarding companies using AI — for example, not long ago, generative AI held promise for automating creative tasks, such as writing marketing copy or creating images. Fast-forward to 2025, it is known more for creating a load of “AI slop,” such as chatbots that put glue in pizza recipes and chatbots that go haywire when prompted with a specific keyword or phrase.
Meanwhile, a U.S. Senate subcommittee recently issued a report on how the largest health insurance companies in the country leverage AI to disproportionately deny prior authorization requests for post-acute care.
And certain states – including California, Colorado and Utah – already are placing more guardrails around how health care providers leverage AI and how transparent providers are with consumers regarding AI.
AI can be a useful tool, but only for specific use cases, and only if it is paired with human logic and creativity. I think 2025 will be a year in which some expectations are reset in light of its ongoing pitfalls.
Senior living finally breaks the mold
Developers and operators are preparing to grow their portfolios for a new generation of older adults. Although headwinds are still making new projects hard to pencil out in early 2025, many are hoping for a mid- to late-year pickup in new construction. And it’s sorely needed given the industry’s widening gap between supply and demand.
But that doesn’t mean that companies will rush out to build the same kind of community they always have once headwinds start to clear. As developers have noted time and time again in recent years, the boomers will want something different than what came before. And as senior living companies prepare for their next big growth push in 2025, this will lead to new kinds of communities that break the mold of what senior living is.
Already, the industry has put forth big ideas about communities co-located among other kinds of housing or projects with biophilic design features. As development ramps up, senior living companies will tailor their designs and services to specific markets and regions, more in line with how operators including Aegis Living have done in the last decade.
Senior living companies are already testing new models and communities to attract a new group of seniors. One example of that trend can be seen in companies like Avenue, which is moving forward with a concept to combine active adult and preventative health services called Viva Bene.
“We desperately need new operating models to make senior living a sustainable business for the next decade, when the boomers are at the height of demand for higher-acuity settings,” Avenue principal and co-founder Laurie Schultz recently told Senior Housing News.
The middle-market is also an area where operators are evolving, although progress to that end has been slow despite the large and growing opportunity to meet demand from the millions of older adults belonging to the “forgotten middle.”
Whether these strategies ultimately move the industry’s national penetration rate above its current rate of 10% to 11% is unclear, but that is a goal of many companies as they look to grow and evolve in the year ahead.
Scale becomes an even bigger question
Since the merger between Brookdale Senior Living (NYSE: BKD) and Emeritus more than 10 years ago, the senior living industry has had a sizable question on its mind: How big is too big?
In 2025, that conversation will continue as senior living operators debate how big they can get in order to meet the most demand without becoming unwieldy. Brookdale, still the nation’s largest senior living operator, will likely keep its top spot in 2025, even after downsizing its operations with landlord Ventas (NYSE: VTR) late in 2024.
“As the largest senior living provider in the country, our size and scale provide great benefits to our residents and families,” Baier recently told Senior Housing News.
But as I’ve noted before, Brookdale is still a shrinking giant, and Baier has told me multiple times that her end goal is a company that has both a lean profile and the ability to serve many older adults across the country.
Other senior living companies are catching up as they too seek to find out how large they can be without becoming too big. One such company is Discovery Senior Living, which has multiple operating companies under its corporate umbrella. The company is still growing its regional operating model despite not rushing back to new development, and CEO Richard Hutchinson. Many smaller operators are also growing quickly, especially as senior living lease agreements are tweaked as REITs and other owners look to retool their portfolios.
As Brookdale and Baier can attest, finding a balance between size and flexibility is not an easy feat, especially given that operators usually grow with a mix of communities and a variety of capital partners, usually including REITs. The risk for operators in 2025 will be that they grow too quickly, and are bogged down by sub-standard, mismanaged or poorly located communities. On the flip side, operators that can successfully upsize now and maintain quality will be in prime position to take advantage of the industry’s years-long demand runway ahead.
The Taco Bell effect targets Gen X and millennials
The oldest baby boomers will turn 79 in 2025, but more operators in the coming year will think beyond the generation that has served as the senior living industry’s north star for the last couple of decades.
No, that doesn’t mean that operators are building senior living communities specifically for the Gen X generation, at least not yet. But it’s worth noting that the oldest Gen X-er turns 60 in 2025, which is not all that far off from retirement age – and not that far off from the consumer that active adult communities are targeting.
Already, some organizations including Mather have begun studying the wants and needs of Gen X with an eye on their future wants and needs. And operators have privately told me they are already thinking about the generation in their future plans, even as they have yet to serve the bulk of the boomer generation.
Gen X is a slightly smaller generation than the boomers. Even so, 2019 data cited by Pew Research indicates that the generation will become more numerous than the boomers by the year 2028.
The millennial generation is larger than both Gen X and the baby boomer generation, but even further still from retirement age. That said, the children of boomers – whether members of Gen X or millennials – will serve as important decision-makers on the kinds of communities their parents choose at the end of the day, and so they will have an increasingly outsized influence on the choices operators make in the years to come.
Already, the industry is adapting its sales and marketing practices with those generations in mind. And communities are arriving with amenities that appeal more to the so-called “adult daughter” prospects, such as more eclectic and intimate dining venues, elaborate outdoor spaces, and retail and spaces designed to be more friendly to members of the public.
As senior living becomes more cognizant of younger generations, I am also seeing more awareness regarding seeing senior living among people who might not otherwise think about it, and more creative and less cliched depictions of senior living in popular culture and marketing. Call it the “Taco Bell effect,” in light of the restaurant chain’s “early retirement experience” rolled out earlier this year. The past year also saw Netflix garner critical praise for its Ted Danson-in-a-retirement community series “A Man on the Inside,” and there’s the fact that Disney’s StoryLiving communities are coming together with senior housing as a core offering. In 2025, senior living operators have an opportunity to embrace this awareness and market what they do to younger decisionmakers.
