New Construction In Senior Housing Continues Decline Over Last 24 Months

The senior living industry may have a supply problem in the coming years unless the credit markets thaw and new construction starts in earnest.  According to the "Seniors Housing Construction Trends Report 2010" produced by the National Investment Center for the Seniors Housing & Care Industry (NIC) and the American Seniors Housing Association (ASHA), construction activity has slowed significantly for seniors housing and care over the past two years in the nation’s top 100 metro markets.

"Our findings mirror the general lack of available construction financing still prevalent in the marketplace," said Robert Kramer, president of NIC. "Many regional banks, traditionally the source of construction financing for our sector, simply aren’t lending to the level that they were prior to the recession/credit crisis. Starts were down 32% from the prior year for all combined seniors housing and care properties, including senior apartments, and down 57% from two years ago. We also saw a drop-off in entrance-fee CCRC construction, which accounted for 13% of all units under construction, compared to 22% in 2009."

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The report provides An overview of construction activity is provided for properties classified as senior apartments, majority independent living, CCRCs, majority assisted living and majority nursing care.  Properties containing more than 25 beds or units are tracked for purposes of the report. 

"We like to say it provides a macro-perspective of the units and properties in our sector under construction or which started construction within the top 100 metropolitan markets," said David Schless, president of ASHA. "These markets account for nearly two-thirds of the U.S. population, including seniors who are 75 years or older."

"One of the most popular features of the report is a section on rankings of metropolitan markets by percent growth in inventory over the previous five-year period," pointed out Kramer. "For example, Chicago has seen a rise in assisted living construction of 36.3% in the last five years. That’s an astonishing figure. Looking at independent living inventory, Houston has seen 29.6% growth. Investors and developers can use these insights on construction trends when planning their development strategies."

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