Why Senior Living Providers Cannot Play Waiting Game Much Longer on Building Projects

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It’s no secret that new senior living development has fallen off a cliff, but the implications of this situation have been front-and-center recently.

Two recent stories in Senior Housing News have taken a closer look at the factors behind the development slowdown, what the future might hold, and the types of projects that are being undertaken even in the current, challenging environment. And a recent analysis from the National Investment Center for Seniors Housing & Care (NIC) using NIC MAP Vision data provided valuable insights into the latest trends in construction, including variations across regions.

I spoke with NIC Principal Omar Zahraoui about the findings, and he added additional perspective on what the numbers mean for providers and developers. In short, challenges remain stark when it comes to new development, but simply waiting for interest rates to fall might be the riskiest strategy of all.


“What’s appealing now is going to change in the next three to five years,” Zahraoui said. “You need some action now so you can be ready for that wave.”

In this week’s exclusive, members-only SHN+ Update, I analyze our recent coverage and the NIC MAP Vision data and offer some key takeaways, including:: 

  • Why operators must get more aggressive on development growth
  • Signs that construction challenges might be easing, at least in some markets
  • How limited supply driving demand may be a double-edged sword

Being proactive vs being passive

Not long ago, the senior living industry worried about building too many senior living communities, leading to oversupply. Today, largely due to the slowdowns of the pandemic, the industry has the opposite problem.


In the last four years, construction of new senior living communities has not yet kept pace with the number of older adults anticipated to move into communities in the coming years.

A new report by Zahraoui, released earlier this month, outlined how the industry is expected to increase by 44,000 units, representing a 4% growth rate, by 2026 assuming all projects currently underway in primary markets pan out.

But that makes up for just half to one-third of projected demand needed to fully capitalize on new customers entering the market by 2026, according to NIC’s projections.

To Zahraoui, the question is whether “senior housing stakeholders capitalize on these trends and proactively prepare for the future, or will they maintain a passive wait-and-see stance.”

Based on softening construction costs in certain primary markets, there could be signs that new development may become easier in the months ahead, regardless of the U.S. Federal Reserve’s balking at cutting interest rates in the first half of this year.

Zahraoui told me, based on NIC MAP Vision data, that construction activity in senior living previously fell in 2007 and 2008 during the Great Recession, before picking back up in the years that followed. Although he doesn’t think history is repeating, as the old saying goes, it does sometimes rhyme. 

“History doesn’t repeat itself, but it often rhymes so you have to look at history,” Zahraoui said.

Construction activity in the Mid-Atlantic region has shown 10% positive growth in 2023 compared to 2019, the gold standard of “pre-pandemic” comparisons of health for the industry, according to NIC Map Vision data.

But markets in the Northeast, where construction has dropped 64% since 2019, or the East North Central region that saw a 51% dip in that time, remain far behind projected unit demand, according to the NIC MAP Vision data presented in the NIC analysis.

While construction rates vary by market, it’s important to recognize this modicum of positive growth as a potential sign that development activity could pick up in 2025 and into 2026.

“It’s not a matter of if the other regions of the country will follow, but it’s just a matter of time and it’s going to be very soon,” Zahraoui added. “That definitely depends on the Fed cutting rates, but the fundamentals of seniors housing are strong.”

I don’t believe developers keen on entering the industry, or operators looking at new development to grow existing portfolios, can wait much longer on the sidelines. That’s supported by the fact it takes 75% of new senior housing properties nearly three years from planning to shovels in the ground, NIC MAP Vision data shows. 

Looking at the state of the market, I see some senior living companies remaining proactive rather than passive, like Confluent Development’s $500 million senior living pipeline to firms like Ryan Cos. and Silverstone being ready to start projects at a moment’s notice as market conditions improve.

Along with new, ground-up development, some operators are taking smaller bites of the apple as demonstrated by operators pursuing cottage-unit development and community renovations. Some operators, like Life Care Services (LCS) have kept affiliated development companies busy with primary market projects planned. That’s not to mention the bullish nature of active adult providers continuing to grow as seen by real estate firm Greystar’s recent investment plans, with providers like the Headwaters Group taking queues on developing the independent, lifestyle-driven product to fuel growth.

Other operators like Northbridge Companies have taken new approaches involving outside partners, with the company focusing on growth while partnering with Amazon (NYSE: AMZ) on affordable living. Liberty Senior Living is also taking a different approach to future development, launching a new ownership model to spur physical plant growth.

Why limited supply, occupancy gains can’t be a cure

Over the last 11 quarters, NIC MAP Vision has reported occupancy gains across its tracked 31 NIC MAP Primary Markets, the longest stretch of census growth reported since data tracking started in 2005. 

While limited supply has made for low-hanging fruit for operators to lease up communities, this short-term bump in occupancy is not sustainable for the long-term given the aging stock of senior living properties nationwide.

NIC MAP Vision data shows that 44% of existing senior living properties are nearly three decades old, and new residents typically seek new amenities with updated lifestyle offerings to support active lifestyles. As the boomers age into senior living, those forces could ultimately drive down the pace of occupancy regrowth if operators are unable to pursue new development or modernize their portfolios. 

With good absorption of units compared to inventory growth across various markets, that momentum could continue over the next three years as construction starts to catch up to the torrid pace of demand.

In other words – despite challenges in obtaining financing at favorable rates, operating margin compression, and workforce challenges – now is the time to keep CapEx dollars flowing for renovations and repositionings.

We recently highlighted what several organizations are doing on this front, including how operators like Onelife Senior Living and developer LCS Development and more are preparing new growth with the next generation of senior living customers in mind.

We believe that renovation and repositioning is so important right now that this year, we’re calling Senior Housing News’ annual BUILD conference the ReBUILD conference, taking place in Chicago on Nov 20-21. We’ll be focusing in particular on how providers are seizing on this moment to reimagine their communities and operating models through innovative construction projects. If you have projects or renovation strategies that fit this description, please reach out and let us know; we’re starting to secure speakers and sponsors.

As NIC’s Zahraoui said, the sector “need[s] some action now” – ReBUILD will be an event to showcase just how much action is happening, and what’s to come.

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