Kayne Anderson Real Estate, the real estate investment arm of Kayne Anderson, expects significant capital rotation into US alternative real estate sectors, such as medical office and seniors housing, driven by increasing demand for these properties.
Expected Federal Reserve interest rate movements and the economic impacts of the US-Iran conflict are unlikely to deter fund inflows into sectors benefiting from an aging population, Kayne Anderson Real Estate said.
“We don’t see rate policy as the primary driver of capital moving into alternatives. That rotation is grounded in strong fundamentals and rent growth, specifically, supply-demand imbalances in sectors tied to demographic needs, as well as an existing overallocation to traditional sectors like office and large-bay industrial,” Kayne Anderson Real Estate said in an email to The Korea Economic Daily.
“We think this next decade will be a super cycle for alternative real estate sectors.”
Kayne Anderson Real Estate said demand for assets like medical office and seniors housing is “less elastic,” while higher rates may slow activity in more discretionary property types. Traditional sectors such as office, retail, and large-bay industrial properties tend to be more sensitive to macroeconomic conditions, the firm added.
Rising oil prices, fueled by supply disruption in the Middle East, continued to add to inflationary pressure in the US, fanning expectations that the Fed may not be able to lower interest rates.
SHIFTING ALLOCATIONS
Capital has already been flowing from traditional real estate sectors into alternative ones.
US alternative transaction volume increased to $87 billion in 2025, up 70.6% from $51 billion in 2020, according to Kayne Anderson Real Estate’s analysis of real capital analytics data. The alternative segment’s share of total US commercial real estate transaction volume has grown to 16% from 12% during the period.
The rapid expansion of data centers for the fast-growing artificial intelligence industry, along with sustained demand from demographic-driven sectors, led the growth, the firm said.
“While data centers account for a meaningful share of the increase, we’ve also seen strong momentum in healthcare real estate, particularly seniors housing and medical office, where demand is tied to long-term population trends rather than economic cycles,” Kayne Anderson Real Estate said.
The firm, focusing on the US market, expects those properties to attract more capital in the coming years as it remains bullish on the sectors.
“We’re still early in what we view as a long-term shift toward sectors supported by demographic demand,” it said.
“Over a longer horizon, sectors such as seniors housing and medical office are expected to become more widely recognized as core real estate sectors within institutional portfolios.”
In South Korea, one of the fastest-aging countries, the state-run National Pension Service (NPS) is considering entering the nation’s senior housing development market, marking its first greenfield investment in elderly residential facilities.
LONG-TERM INVESTMENTS
With the sustained capital inflows into alternative real estate in the US, Kayne Anderson Real Estate’s assets under management increased about 16% to $20 billion at the end of 2025 from a year earlier.
“That growth is less about short-term market momentum and more about long-standing partnerships with investors who share our conviction in these sectors,” Kayne Anderson Real Estate said.
“It also reflects a consistent, disciplined approach to investing, which we believe positions us well as capital continues to move toward alternative real estate.”
Kayne Anderson Real Estate has spent $18 billion to acquire nearly 50 million square feet of medical office space in approximately 1,100 properties across 45 states since 2013, as of March 31, 2026. It has invested $5.4 billion in more than 110 private-pay seniors housing communities in 25 states, totaling over 15,000 units.
Jennifer Nicholson-Breen edited this article.