While real estate developers are working fast to meet the housing needs of a rapidly growing U.S. senior citizen population – which is projected to almost double in the next 35 years – some analysts are warning that developers may be moving too fast, Bloomberg Businessweek reports.

A jump in supply is forecast to cut growth in senior-housing net operating income to 1.8 percent in 2015 and 1.4 percent in 2016 from 3.3 percent this year, Green Street Advisors Inc. told Bloomberg.

The rapid supply increase may hurt healthcare REITs and other players in the space, including Brookdale Senior Living Inc. (BKD:US), which is buying competitor Emeritus Corp. (ESC:US) for about $1.4 billion to become the biggest owner of senior properties, the research firm told Bloomberg.

“Increased supply is always worrisome in any type of commercial real estate,” Jim Sullivan, a managing director at Newport Beach, California-based Green Street, told Bloomberg. “In senior housing, new construction has ramped up considerably over the last two years.”

Health-care REITs, which soared to records early last year, have been the worst-performing part of the property-trust market in the past 12 months, Bloomberg reports. The U.S. had 526,144 senior-housing units in the 31 largest markets in the first quarter, up 1.4 percent from a year earlier, and an additional 16,181 units are under construction, according to the National Investment Center for the Seniors Housing & Care Industry.

The Bloomberg health-care REIT index fell 17 percent in the 12 months through yesterday, compared with a 3.7 percent decline for the broader Bloomberg REIT index.

Peak demand for senior housing is projected to be 15 to 20 years away, Jacob Gehl, managing director and founding partner of Blueprint Healthcare Real Estate Advisors, a brokerage and advisory firm in Chicago, told Bloomberg.

While Brookdale Chief Executive Officer T. Andrew Smith acknowledged there has been substantial real estate development growth, he said the company is confident about its growing investment in the sector.

“There’s been a little bit of an uptick – we’re mindful of that,” Smith told Bloomberg when asked about supply at a Barclays Plc conference in March. “You have to go down and look at what’s happening in each local market. We just don’t see that much. It’s not to say that there is none, but we don’t see that much truly, directly, adversely new competition.”

Other health-care real estate executives agree with Smith, telling Bloomberg that concerns about an oversupply of senior housing supply are excessive. According to the Census Bureau, the estimated number of people age 80 to 84 was 5.8 million in 2012, and is projected to climb to 13.5 million by 2040.

Read the Bloomberg article here.

Written by Cassandra Dowell