The seniors housing industry saw its transaction volume spike last year to levels not seen since the peak years of 2006 to 2007.

More than $25 billion in transactions closed in the space last year, with the bulk of those—nearly $20 billion worth—coming from the seniors/health-care REIT sector, according to market research firm National Investment Center for the Seniors Housing and Care Industry.

The big REITs such as Ventas and HCP got bigger last year—together they accounted for nearly $15 billion in portfolio deals. And while overall transaction volume isn't likely to match last year's surge, interest from private players is growing from both domestic and cross-border investors.

“There is substantial room in this industry for investors beyond the REITs—in fact, most owner/ operators would prefer alternatives to the REITs,” says Mel Gamzon, president of Fort Lauderdale, Fla.–based Senior Housing Investment Advisors, and a 30-year veteran of the industry. “The equity is mostly coming from here, in the U.S., but the last couple of years, the amount of foreign investors has been increasing.”

In 2011, Gamzon's firm closed more than $250 million in four large portfolio deals, and three of those deals were with cross-border investors from Asia, Canada, and the Middle East.

“Essentially, seniors housing is a need-based, defensive real estate strategy, and those are big, glaring words to foreign investors,” says Gamzon. “What else out there is really need-based?”

Demographics are clearly on the industry's side: More than 10,000 Baby Boomers turn 65 each day, a trend that began only last year. Currently, occupancy rates on seniors housing (not including skilled nursing facilities) average around 90 percent nationwide, a 200 basis point improvement from a year ago, according to the American Seniors Housing Association.

Yet, it's the need-based aspect of seniors housing that's driving its success. The average age of those entering independent living today is around 82, whereas just five years ago that figure was in the high 70s. An increasing number of owner/operators, such as Chicago-based Senior Lifestyle Corp. and Kirkland, Wash.–based Merrill Gardens, have enhanced their operating capabilities to accommodate residents as they age in place.

“We're finding that independent living is blending a bit more today with assisted living,” says Gamzon. “Seniors are entering independent-living facilities at an older age, and there's either a real or perceived need for services.”

The fortunes of the independent-living sector have historically been tied to the for-sale market—seniors won't move into a new community until they can sell their homes. But the integration of more health and wellness services has helped the independent-living sector bounce back after a few tough years.

While access to capital—particularly construction financing—is still difficult, in many respects that's another wind in the sector's sails.

“In many markets, this industry remains undersupplied, so we're looking at several years, at least, of limited new housing production,” says Gamzon. “It's patient money that's in the marketplace today, and that's very good news for the business.”