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Senior LivingDallas-Fort Worth

Senior Living Investment in Dallas-Fort Worth

DFW's senior living market is tightening. Baby boomers aren't slowing down, construction is. Cap rates ran from 6.2% to 8.4% last quarter depending on location and acuity mix. Private pay properties in Plano and Frisco trade at the low end. Medicaid-heavy facilities in secondary markets push 8%+. Staffing costs finally stabilized after three years of chaos. Occupancy hit 87% market-wide, best we've seen since 2019. The math works again if you buy right.

Market Context

Cap Rate Range

6.2% to 8.4%, with stabilized Class A properties in prime submarkets at 6.2%-7.1% and value-add or secondary market assets at 7.5%-8.4%

Current Vacancy

13.1% overall vacancy rate, down 240 basis points from 2024 peak, with independent living at 11.8% and memory care at 15.2%

Rent Trend

Average monthly rates increased 4.8% year-over-year to $4,420 for independent living, $5,850 for assisted living, and $6,720 for memory care

Absorption

Net absorption of 1,240 units in trailing twelve months, strongest performance since 2020, driven by limited new supply and demographic demand

Price Per Unit Trend

Average price per unit reached $195,000 for stabilized properties, up 6.2% from prior year, with memory care commanding $220,000+ per unit

Transaction Volume

$780 million in senior living trades through Q1 2026, 34% increase from same period prior year, with average deal size of $28 million

Submarket Analysis

Plano/Frisco

6.2%-6.8% cap

Vacancy

9.4%

Avg Rent (1BR)

$4,850 IL / $6,100 AL

Strongest fundamentals. High private pay mix. New supply limited by land costs.

OM Tip

Break out Toyota headquarters area performance - different tenant profile than legacy Plano

North Dallas/Addison

6.5%-7.2% cap

Vacancy

11.8%

Avg Rent (1BR)

$4,650 IL / $5,950 AL

Solid demographics but facing competition from new Frisco supply drawing residents north.

OM Tip

Address proximity to medical facilities - key driver for this demographic

Mid Cities/Irving

7.0%-7.8% cap

Vacancy

14.2%

Avg Rent (1BR)

$3,980 IL / $5,200 AL

Value play. Corporate relocations bringing adult children closer. DFW airport noise issues for some sites.

OM Tip

Include demographic shift data - younger retirees moving in from California

Fort Worth West/Keller

6.8%-7.5% cap

Vacancy

12.1%

Avg Rent (1BR)

$4,200 IL / $5,500 AL

Benefiting from oil and gas wealth. Limited competition but smaller market size.

OM Tip

Energy sector retirement timing affects move-in patterns - address seasonal variations

Suburban South/Cedar Hill

7.8%-8.4% cap

Vacancy

16.8%

Avg Rent (1BR)

$3,650 IL / $4,800 AL

Higher Medicaid mix challenges margins. Land costs lower but demographic headwinds persist.

OM Tip

Payor mix breakdown critical - some properties pushing 40% Medicaid which affects exit cap assumptions

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What Your OM Needs to Address

Care Level Revenue Breakdown

Independent living margins compress under staffing pressure while memory care maintains pricing power

Data to Include

Separate P&L by care level for last 36 months, move-in/move-out patterns by acuity, wait list composition

Texas-Specific Regulatory Compliance

HHSC licensing requirements affect operating costs and expansion potential

Data to Include

Current license capacity vs physical capacity, pending regulatory changes, inspection history, required staffing ratios vs actual

Payor Mix and Medicaid Exposure

Texas Medicaid reimbursement rates lag national average and affect exit cap rate assumptions

Data to Include

Private pay vs Medicaid breakdown by unit type, average length of stay by payor type, rate increase history by source

Staffing Cost Normalization

Labor costs spiked 2021-2024 but stabilizing - key to margin recovery

Data to Include

Hourly wage trends by position, turnover rates, use of agency staff, current staffing levels vs pre-pandemic

DFW Market Positioning

Competition mapping essential given concentrated development in prime submarkets

Data to Include

Competitive set analysis within 3-mile radius, market share data, rate comparison by care level and amenity package

Corporate Relocation Impact

Adult children relocating to DFW creates move-in opportunities from other states

Data to Include

Move-in origin data, family proximity influence on residency decisions, tour-to-move-in conversion rates

Investment Outlook

Short Term

Market's in a good spot. Occupancy climbing, new supply limited, staffing costs finally predictable. Deals trading quickly at 6-7% caps for quality assets. Lending available but watch rate sensitivity on high-leverage deals. Focus on properties with private pay upside and proven operators.

Medium Term

Demographics work in your favor through 2028. DFW population growth continues bringing adult children closer to aging parents. Construction costs and permitting delays keep new supply manageable. Expect cap rate compression in prime submarkets as fundamentals improve. Memory care shortage becomes more pronounced.

Long Term

DFW becomes top-tier senior housing market by 2030. Corporate relocations created wealth concentration that supports premium pricing. Texas regulatory environment remains favorable compared to California and Northeast markets. Land constraints in prime locations limit competition. Exit opportunities strong with both strategic buyers and REITs active.

Buyer Profile

REITs chasing stabilized assets in Plano/Frisco at 6-6.5% caps. Private equity targeting value-add deals with operator partnerships. High-net-worth seeking stable cash flow in secondary submarkets. Avoid over-leveraged buyers - this asset class requires operational expertise not just financial engineering.

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