PACE Tenants Deliver the Stability Investors Want and the Impact Communities Need
PACE centers are among the most stable healthcare tenants a landlord can hold. Operators are double-vetted by state and federal regulators before they ever reach a lease, they sign 10-to-20-year terms and sink $5M+ into a clinical build-out they won't abandon, and their funding is tied to Medicare and Medicaid. The result is grocery-anchor stability with lower volatility and rising demographic demand.
At this year's National PACE Association conference, one theme stood out: PACE is positioned to shift from niche to mainstream. It's no longer a small corner of senior care, it's one of the most effective, sustainable care delivery models in the country.
That shift matters to more than operators. If you own healthcare-zoned space in a community with an aging population, a PACE center could be the most stable, high-impact tenant in your portfolio. Many landlords still see PACE as risky or untested. The reality is the opposite.
Why are PACE centers ideal real estate tenants?
Financial stability that's vetted twice
It's easy to assume a new PACE operator is a startup with no credit. In practice, few organizations reach the leasing stage without extensive due diligence. Every PACE program is reviewed by both state and federal regulators, so by the time an operator is at real estate negotiations, its leadership, financials, and compliance systems have already passed layers of oversight most healthcare companies never face.
On top of that, PACE startups attract serious institutional capital: healthcare-focused venture and private equity groups that specialize in long-term, infrastructure-heavy models and know half their investment is spent before day one of operations. If they're backing a team through that, it's because they've seen a clear path to scale.
The bottom line: between government review and institutional-capital diligence, there's very little about a PACE operator that hasn't been tested.
Long-term tenants with heavy capital investment
PACE centers are built to stay put. A typical site runs 15,000 to 25,000 SF and requires $5 million or more in interior build-out. Once the walls go up, they aren't coming down. The facility combines primary care, adult day care, rehab, and offices, essentially a senior center with high-touch healthcare, and it's highly regulated, licensed, and designed for continuity. Moving a PACE center disrupts participant care and means starting over on capital and regulatory approvals. I covered the development side in PACE Center Development.
For landlords: stable income and almost no rollover risk — comparable to a strong grocery anchor, but with higher margins and lower volatility. (See The Landlord's Math.)
From vacant grocery anchor to a thriving PACE center serving 400+ seniors — a project I worked on.
Real transformation
This former grocery store sat vacant for years, a liability for the landlord and the surrounding community. Today it's a fully operational PACE center serving over 400 seniors with primary care, adult day services, rehab, and social programming. It didn't just fill square footage; it restored a community asset and turned a struggling property into one of the most stable tenants in the portfolio.
Turning struggling assets into community landmarks
Every community has that building: the vacant anchor where something always seems to be happening in the parking lot, the one everyone says someone should really do something with. I've been the co-tenant to that vacant anchor. They become magnets for crime, vandalism, and decline, and a property's reputation shifts from community fixture to community risk.
When a PACE center moves in, you can feel the difference. I've walked those same sites before and after, and the noise, energy, and pride are completely different. Construction crews arrive, façades are repaired, signage and lighting are upgraded, and there's life where there was neglect. The loitering, theft, and safety concerns that used to define the site fade almost overnight, and the building becomes known for what it gives back: health, connection, and care for older adults.
The impact: a PACE tenant restores a community asset. It transforms the physical property and how people feel about the space, and about the owner who invested in it.
Sophisticated operators, low management burden
PACE tenants aren't small-business owners learning as they go. They're healthcare providers accountable to regulators, investors, and participants and their families. By regulation, PACE organizations maintain building systems and keep maintenance logs, and they hold their facilities to clinical standards, including HVAC, life safety, and infection control. That means fewer emergency calls, better property condition, and a consistently maintained environment.
For property managers: that operational discipline reduces management time and improves property performance across the board.
A perfect fit for long-term hold strategies
PACE works best for landlords who play the long game. Short-term investors looking for a quick exit may struggle to underwrite early-stage operators, but for medium- and long-term holders focused on stable income and predictable growth, these tenants are ideal. Within a few years most centers reach $20 to $30 million in annual revenue and hit breakeven, and once that happens they're locked in for the long term.
PACE began with On Lok in 1971 and was recognized as a permanent provider type under Medicare and Medicaid through the Balanced Budget Act of 1997. While "wellness" is having a moment, PACE has spent decades quietly proving what real outcomes look like. Unlike many healthcare startups, PACE operators aren't chasing the next funding round or exit. They're building care infrastructure for the next 20 years.
Building upgrades that strengthen the asset
Every PACE build-out improves the building it occupies: electrical and plumbing upgrades, seismic work, ADA compliance, new roofs and mechanical systems, sometimes façade work or ACM and lead-paint remediation. Depending on the lease structure the costs may be shared, but the benefit is mutual, extending the building's lifespan and increasing its long-term value. PACE tenants maintain their facilities far above most users, typically with dedicated facilities staff or clinical-grade maintenance partners.
Mutual benefit: that commitment to quality protects both their operation and your investment.
Revenue power and demographic tailwinds
PACE isn't a short-term bet, it's a demographic certainty. The U.S. older-adult population is expected to double over the next two decades, and the number of adults with chronic conditions and functional limitations keeps rising. Every one of those individuals represents growing need for coordinated, community-based care. Unlike healthcare startups chasing new models, PACE has five decades of proof behind it, and programs starting today are positioning to meet the needs of the next generation of older adults.
What makes PACE durable from a real estate perspective?
- Stable reimbursement. Funding is tied to Medicare and Medicaid, giving predictable revenue.
- Immovable tenants. The facilities are expensive to build and even harder to replace, so tenants stay.
- Accelerating demand. Need for services outpaces available programs in nearly every major metro.
That combination — stable reimbursement, immovable tenants, and accelerating demand — makes PACE one of the most under-appreciated long-term opportunities in healthcare real estate.
Key takeaways
- PACE tenants are double-vetted, by state and federal regulators and by institutional healthcare capital, before they ever reach a lease.
- They sign 10-to-20-year leases and invest $5M+ in a 15,000–25,000 SF clinical build-out, so rollover risk is minimal — grocery-anchor stability with lower volatility.
- Funding tied to Medicare and Medicaid gives predictable reimbursement; mature centers reach roughly $20–30M+ in annual revenue.
- Regulation forces clinical-grade facility maintenance, which lowers management burden and protects the asset.
- A doubling older-adult population over two decades, plus a 50-year track record, make PACE a durable long-term hold and a genuine community asset.
Frequently asked questions
Why are PACE centers good real estate tenants?
Because they combine stability with permanence. PACE operators are vetted by state and federal regulators and by institutional investors before leasing, they sign 10-to-20-year terms, and they invest $5M+ in a clinical build-out they can't easily relocate. Funding tied to Medicare and Medicaid makes revenue predictable. For a landlord, that's grocery-anchor stability with higher margins and lower volatility.
How long are PACE center leases?
PACE leases typically run 10 to 20 years. The model depends on a heavily built-out, licensed clinical facility that's disruptive and expensive to move, so operators commit to long terms and renew rather than relocate. That length, combined with substantial tenant capital in the space, gives landlords minimal rollover risk.
How much does a PACE center build-out cost?
A typical PACE center runs 15,000 to 25,000 SF and requires $5 million or more in interior build-out, covering primary care, adult day services, rehabilitation, and offices. Because the operator funds that level of clinical fit-out, the tenant is financially anchored to the space, which is part of what makes the lease so durable.
Are PACE operators financially stable tenants?
Yes, and more vetted than most healthcare tenants. Every PACE program is reviewed by both state and federal regulators, so leadership, financials, and compliance are examined before approval. Most are also backed by healthcare-focused venture or private equity capital that has run its own diligence. Funding tied to Medicare and Medicaid then provides predictable, ongoing reimbursement.
What kind of building works for a PACE center?
Healthcare-zoned space in a community with an aging population, often a second-generation conversion such as a former grocery store, big-box retail, or office building rather than ground-up construction. These larger footprints suit the 15,000-to-25,000 SF program, and converting a struggling or vacant anchor can both stabilize the asset and restore a community landmark.
Understanding the Real Value of PACE
PACE centers aren't speculative plays. They're built for longevity, designed to serve communities, and structured to generate stable, predictable returns. I'm currently working with clients looking to partner with investors to acquire and develop properties for PACE programs. If you want to understand how these centers deliver both financial stability and community impact, let's talk.
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