Market Overview
Arizona's assisted living market entered 2026 with strong fundamentals. The state's senior population (65+) grew 4.2% year-over-year, outpacing national growth of 3.1%. Total licensed ALF and BHRF capacity reached approximately 3,050 facilities with over 53,000 beds statewide.
Transaction volume in Q1 2026 increased 18% compared to Q1 2025, driven by continued buyer demand and stabilizing interest rates. The average transaction size was $2.1M, with the largest deal — a 90-bed facility in Scottsdale — closing at $6.8M.
Cap Rate Trends
Cap rates in Arizona tightened slightly in Q1 2026, reflecting strong buyer competition for quality assets. The median cap rate for stabilized ALFs (80%+ occupancy) was 8.5%, down from 9.0% in Q4 2025. Smaller residential care homes (10 beds or fewer) traded at wider spreads, with median cap rates of 10.5-11.5%.
The cap rate compression signals continued confidence in the sector. Lenders — particularly SBA 7(a) providers — have remained active, with favorable terms for qualified buyers.
Supply and Demand Dynamics
New facility licensing activity remained elevated, with ADHS processing 47 new ALF/BHRF applications in Q1 2026. However, the net supply increase was modest due to closures and license surrenders among underperforming operators. The net addition of approximately 200 beds represents a 0.4% increase in total capacity.
Demand drivers remain robust: Arizona added an estimated 28,000 residents aged 65+ in the trailing twelve months. The state's occupancy rate for stabilized facilities averaged 88%, up from 85% a year ago.
Geographic Highlights
The Phoenix metro area continues to dominate transaction activity, accounting for 65% of Q1 closings. Tucson saw increased buyer interest, particularly for BHRF conversions. The Prescott and Sedona corridor remains supply-constrained, with limited inventory driving premium valuations.
Outlook for Remainder of 2026
We expect continued cap rate stability, steady transaction volume, and growing institutional interest in Arizona's ALF sector. The biggest risk to watch is potential changes to AHCCCS reimbursement rates, which could impact BHRF and Medicaid-heavy operators. Facilities with strong private-pay revenue profiles will continue to command premium valuations.
Jake Crawford
Founder & Managing Director
Jake Crawford is the founder of Crawford Commercial, specializing in assisted living facility investment sales, valuations, and advisory services across the United States. With deep expertise in Arizona's senior housing market, Jake helps facility owners, investors, and operators navigate complex transactions with confidence.
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