Senior Housing Developers Eye Relocation, Renovation to Meet New Demand

With steady demand for senior housing options as the population ages across the United States, those in the business of senior housing development are seeing some regional demand for renovation and relocation in particular. Part of it has to do with new legislation regarding rehospitalizations for Medicare patients, but the trend is largely in getting older properties up to speed whether that means renovating or relocating.

The relocation trend aligns in with new penalties implemented in October associated with rehospitalizations under Medicare. For some in the senior housing development space, proximity to hospitals will be a driving force in location of the new communities. 

For older communities that were built years ago in proximity to hospitals, there is less of a selling point than for locations that are closer to newly constructed hospitals, says Darrell Smith of Houston-based Jamail & Smith Construction. 


“Companies with money and wherewithal are buying,” he says. “The question is: how do you bring them up to current standards? There’s a lot of remodel activity in skilled nursing.” 

For those that are too old, developers are looking to new locations entirely or to relocating current facilities that do not meet today’s standards.

“A lot of the old communities are near hospital locations, but the hospital may have moved. Now the opportunity is to move the communities to be near hospitals. The cities in Texas have expanded [and are driving this trend],” Smith says. This might include acquiring an older property and then relocating it, due to the new readmission penalties senior living facilities now face. 


Dallas-based THREE, which offers senior living design and architecture services has seen a similar demand for renovations due to the aging stock of properties on the market currently. 

“There’s still plenty of repositioning work out there,” says Rocky Berg, principal with the firm. “The lion’s share of the communities are 25 years old. There’s a lot of need out there to become more contemporary with the product.” 

Demand considers not just the speed at which a property becomes available or ready, but the quality at which the property can compete. 

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“[Previously], there was a rush to get product on the ground,” Smith says. “In today’s market, there is a quality requirement on the forefront.” 

Written by Elizabeth Ecker