Senior Housing Construction Costs Near Pre-Recession Highs

Senior housing construction costs are nearing pre-recession levels and will likely continue to rise, despite the labor challenges also impacting the industry.

That’s according to two new issue briefs published by the American Seniors Housing Association (ASHA) and Iowa-based national construction firm The Weitz Company.

The tight labor market is becoming a major issue for multiple markets, causing higher-than-anticipated cost escalation for current construction projects—especially those which are scheduled to start soon, according to ASHA and Weitz’s latest Senior Housing Construction Cost Data Special Issue Brief.


The bi-annual special issue brief is based on nationwide data of senior housing projects under construction or completed by The Weitz Company. The costs are based on a city index of 100, and each city has a distinct index.

Nationally, the cost of construction for assisted living in summer 2016 ranged from $156 to $296 per gross square foot, the brief says. Meanwhile, the cost of construction for independent living in the same time period totaled between $128 and $218 per gross square foot.

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Due to an ongoing need for labor, the brief says, companies are having trouble retaining quality employees and preventing them from leaving to work for the competition. This is especially impacting the skilled labor/trades.

Plus, the number of young, new workers entering the trades is not keeping up with the aging workforce that is moving up through the ranks or leaving the trades entirely. Overall, this trend will impact cost, in addition to potentially slowing construction schedules and causing firms to attempt to do more with less, the brief says.

Based on current data, these cost escalations are expected to continue climbing at a higher-than-usual rate over the next 9 to 12 months, the brief concludes.

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ASHA and Weitz also released a special issue brief outlining senior housing construction cost trends between 2004 and 2016, including the recession’s impact on senior housing construction costs.

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The senior housing market experienced higher-than-usual levels of construction-related inflation through the mid-2000s, the brief says. Then, at the start of the financial crisis in August 2008, the market experienced its worst decline since The Great Depression.

The recession impacted general contractors, subcontractors, engineering firms and designers, and the market as a whole experienced multiple years of declining prices through the end of 2010, before beginning to emerge from the slump, the brief says.

Today, construction costs are reaching pre-recession levels, with moderate-to-high inflation over the last five years, the brief says.

“The current pace of construction, including increasing labor rates, leads us to expect this trend to continue in the near term,” the brief concludes.

Written by Mary Kate Nelson

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