The cost of building a senior living community is still rising in 2024, but there are some reasons to be optimistic about the road ahead.

That’s according to the latest Senior Living Construction Costs report from Weitz Company.

Constructing a mid-level independent living unit in the summer of 2024 ranges from $237 to $284 per square foot, up from $233 to $280 last year. High-end independent living units are also increasing in cost, with a range of $281 to $360 per unit, up from $272 to $354 last year.

Assisted living units have also seen an increase. Mid-level units currently cost $274 to $349 to construct, up from $269 to $361 per square foot last year. High-level units range from $359 to $447 per square foot, up from $353 to $439 per square foot last year.

As construction projects have gotten harder to pencil out, some senior living operators have looked to expand campuses through cottage additions or by renovating community spaces. Those costs are also still relatively high, according to the report.

Additionally, cottage construction ranges from $187 to $217 at the mid-level and $260 to $318 at the high-level; independent living commons range from $382 to $483 at the mid-level and $519 to $669 at the high-level and under building parking ranges from $149 to $185 for mid-level builds and $188 to $235 for high-level.

Labor cost increases and shortages are impacting the costs of new construction. Labor cost increases in 2024 have ranged from 4% to 5%; and the unemployment rate for construction workers sits at about 3.3%, indicating a continuing labor shortage.

Looking ahead, Weitz anticipates a 4% to 5% price escalation for new construction coming in the next 12 months.

But there are some signs that better days might be ahead for senior living companies with regard to construction. The report notes the public sector’s dollar volume for construction is up 11% year over year in the first six months of 2024. The possibility of federal interest rate cuts are also prompting some stakeholders in the private sector to be more optimistic about the road ahead.

“Currently, major indices are trending lower and we are seeing modest compression of contractor margins as subcontractors seek to fill their backlog,” the report’s author wrote.