The cost of senior living construction is still relatively high thanks to significant swings in the price of certain commodities and a tight construction labor market.
That’s according to the latest Senior Living Construction Costs report from construction firm The Weitz Company. The report, released Tuesday and assembled by Weitz Co. Senior Vice President Larry Graeve and Estimator Amy Burk, details typical construction costs for the senior living industry as of the summer of this year.
For a mid-level assisted living project — defined as a typically wood-framed community with standard amenities and finishes — senior living stakeholders can expect to pay about $212 to $272 per gross square foot, according to the report. For high-level assisted living projects with steel or concrete construction and luxury amenities, costs generally range between $285 and $337 per gross square foot.
That is an increase over construction costs the industry saw earlier this year. According to Weitz’s winter 2021 construction costs report, mid-level assisted living projects previously ranged between $200 and $255 per gross square foot, while high-level projects ranged between $268 and $316 per gross square foot.
Those costs include general conditions, insurance, tax, bond and fee, but site costs were excluded. Costs are generally higher in larger metro markets and lower in less competitive ones.
The high cost of building materials and labor has complicated senior living projects that were underway this year and put a damper on new construction starts. In general, senior living construction costs have grown each year since the Great Recession. And although they dipped when the pandemic hit in 2020, construction costs have risen steadily since.
There are two big driving forces behind the current cost of senior living construction. One is the price of commodities such as lumber, which grew to record-high levels in May before falling again in July; and steel, which has grown to become more expensive over the last 12 months.
“Lumber was approximately $950 per 1,000 board feet, climbed up to $1,950 in early May, then decreased to $800 per 1,000 board foot in July, while the July Lumber Futures are pointing even lower,” the report reads. “Steel has climbed steadily over the past 12 months. For example, coil stock, which is used to make metal studs and metal decks, is up 216%.”
The other driving force is the cost of labor. While labor rates have only risen “moderately” this year, prices are under pressure amid a general shortage of skilled tradespeople, according to the report. The construction industry is facing a gap of about 430,000 workers needed to fill current demand, according to the Associated Builders and Contractors.
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