Construction Labor Challenges Push Senior Living Project Costs Higher in 2023

Although the rising prices of commodities for some products have improved, construction labor costs and shortages  are continuing to push the cost of new senior living projects higher in the second half of 2023.

Construction costs per square foot for developers have been on a continuous increase, according to the latest Senior Living Construction Costs report from construction firm Weitz Company.

A mid-level independent living construction is currently ranging from $233 to $280 per square foot,up from an average of $227 to $273 per square foot in the company’s previous construction cost report from earlier this year in the spring High-end developments also showed an increase, ranging from $272 to $354 per square foot compared to $265 to $345 per square foot last quarter.


Mid-level assisted living showed cost ranges from $269 to $361 per square foot, with high-level AL projects showing ranges of $353 to $439 per square foot. That indicated an overall decrease compared to the previous Weitz report, when prices ranged from $263 and $535 per square foot for mid-level construction and $344 and $429 per square foot for high-level projects.

While cost increases are normal and expected in construction, wages for skilled worker labor are up 5.7% annually and “most contractors” are still seeing skilled labor shortages, according to Weitz.

The report’s authors noted the current construction backlog is currently holding steady as well.


“Subcontractors have [a] steady backlog and there is no motivation for them to get aggressive with pricing,” the report states.

The report’s authors also noted that despite some projects being on hold waiting for better interest rates, the non-residential and industrial sectors have shown significant increases with 19.7% and 55% growth respectively compared to last year.

The report also indicates the time of double-digit inflation is passing, with the current outlook showing the next 12 months having 3 to 6% compared to the 9% from last year. The report’s authors said there is some optimism for the economy to be “a soft-landing vs. an all-out recession,” as the current overall U.S. inflation rate as of June is 2.97% compared to the 4.05% from last month.

Additionally, the Architectural Billing Index has been on the rise for the second month in a row.

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