New Market Players Flock to Texas Senior Housing Boom

With construction reemerging in the senior housing sector and development taking off in particular among assisted living and memory care communities, one area that experiencing a higher rate of development is Texas. 

The state’s demographics with highly populated metros including Dallas, Houston and San Antonio, have led operators, including new entrants, to seek opportunities within the Lone Star State. 

Occupancy levels are holding steady at 86% across the southwest region, compared to a national average of 89%, according to the latest data from the National Investment Center for the Seniors Housing and Care Industry. Rent growth, however, is outpacing the national aggregate at 1.8% as marked in the third quarter, three basis points above the national average 1.5%. 


Yet construction levels are high versus the national average. Particularly in assisted living development, new construction far outweighs inventory, with 1072 assisted living units under construction in the Houston area, or 19.2% construction versus inventory; and 28% construction versus inventory in Austin with 528 units being constructed. 

Those figures compare with the national average 5.2%. 

“There’s a lot of new supply coming in,” says Josh Rosen, vice president of planning and development for Dallas-based developer the McFarlin Group. “We did have downturn where you didn’t see a lot of activity going on. A lot is due to population growth. Dallas and Houston are growing exponentially with jobs in Texas and the state being overall more business-friendly. We’re seeing transplants from Michigan and California.”


“We’re seeing transplants from Michigan and California,” Rosen says. “One of the key metrics developers look at is the adult child. Where they go typically the parent will follow.”

“The largest concentration is isolated in Texas,” NIC analysts told SHN of the construction boom. “Houston and Dallas have a fair amount of assisted living projects in their pipelines.” 

The construction is driven by several other factors, Rosen says, as new entrants eye the growing market within the state’s borders and traditional acquirers of senior living properties shift their focus to new development. 

Whether the pace is sustainable remains a question, he says. 

“I’d like to think a lot of these developers know what they are doing and are seeing a compelling opportunity within the market,” Rosen says. “But groups might be transitioning from multifamily or independent living into assisted living because it is a trending market without focusing on the market dynamics. Another important consideration when pursuing new development is whether a new entrant is aligned with an operator with requisite experience. Operations are the most critical component of what we do.”

This month, Avanti Senior Living, a company led by executives bringing hospitality and senior living experience, launched in the high-end suburban market outside of Dallas with plans for a dozen new communities in the coming two to three years. 

The hope is that construction will not outpace demand, as it did in the late 1990s, but there are still concerns that remain. 

“We’re seeing that in some suburban markets and within the metros we could have one, two or three participants in the same primary market area,” Rosen says. “We want to make sure market is strong enough. We’ll internally pass on a lot of markets since we don’t want to be the second or third developer into a potentially saturated market.” 

Written by Elizabeth Ecker

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