Senior Housing Construction Costs Keep Surging

Senior housing construction costs continue to increase across the country, as contractors report a widespread labor shortage.

In fact, 70% to 80% of contractors report difficulty in finding qualified labor, according to a Jan. 19 construction costs brief prepared by Larry Graeve, senior vice president of construction firm The Weitz Company. The brief was prepared for the American Seniors Housing Association (ASHA).

Various factors are contributing to the labor challenges in the construction sector, including a lack of new workers to replace aging workers, and strengthening labor markets presenting more employment options.

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Costs for mid-level assisted living projects currently range between $158 per gross square foot to $299 per gross square foot, depending on the type of materials being used and the location of the project.

That is an increase from $156 to $296 per gross square foot, as recorded by Weitz in August 2016.

Costs are up similarly across other project types, including independent living and skilled nursing.

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“In visiting with various subcontractors, [contractors] are adding contingency dollars to cover overtime risk and adding other pay incentives to maintain an adequate labor force and keep projects on schedule,” Graeve wrote.

Weitz anticipates a 5% to 6% inflation rate over the next 12 months.

Written by Tim Mullaney

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