Senior Living Industry Prepares for Next Big Development Cycle as Demand Swells

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In 2026, senior living development isn’t dead, but it is hibernating.

In the second quarter of 2026, construction starts remained low at levels not seen since mid-2012, according to NIC MAP data. Senior living providers and their development partners are taking on new projects in a more targeted manner and preparing for a time when market conditions turn and allow them to kickstart their next wave of new projects. Also, there are new signs that operators and their capital partners are more willing to consider new development heading into 2027.

Providers are launching more targeted development efforts based on local market demand, and finding success in repositioning or renovating communities, rather than taking a broad-based approach

The clearest evidence that the tide is changing regarding new development in senior living is that new communities are filling up, meaning absorption is high. This velocity has caught the attention of capital providers who previously had little development appetite, according to Berkadia Senior Housing and Healthcare Senior Managing Director Dave Fasano.

“We’re actually having capital groups aggressively reach out asking, ‘Who should I be talking to in the development game?'” Fasano said during a recent SHN+ Talks webinar. Fasano said asset prices could be nearing the “capital return thresholds” that make development possible, with the feasibility of new development “closer than it has been in the past 12 months.”

At the same time, the industry faces a growing development and supply gap and needs more than $1 trillion in new investments through 2050 to meet projected demand, according to NIC MAP data.

One operator jumping back into development is Frontier Senior Living. In July, the Dallas-based senior living provider announced plans to start between five and 10 new, full-continuum communities with large independent living components to attract incoming baby boomers.

“It’s an excellent time to be developing,” Frontier CEO Greg Roderick said during the webinar. “The demand is there, the buildings are filling more quickly than I’ve ever seen before… I don’t feel the momentum has really gotten behind it, but I think the timing is right.”

Aegis Development, the growth and development wing of senior living provider Aegis Living, spent recent years adding capacity in assisted living and memory care to help meet needs-based demand for senior living as older adults wait longer to enter communities in some cases.

Aegis Development President Adam Clark told SHN he believes the industry is “a little bit early,” but cautioned that the outsized return of new development may not take place until the industry hits “pre-COVID-19 pandemic demand levels.”

From a project planning perspective, RLPS Architects Senior Designer Max Winters said the firm was managing a growing list of providers seeking design for new repositioning projects and full-continuum communities.

“If my client load is any indication, we’re certainly right at the moment if we’re not quite there yet,” Winters said during the webinar. “I think the demand is there, the demographics are there, as was already said, but I do see, very real on an everyday basis, people moving forward with plans to develop projects.”

Investors get ‘savvy,’ forcing operators to ‘do our homework’

To get development done in 2026 and going forward, senior living providers have taken a more targeted approach to new growth.

To achieve healthy development in the current demand moment, Roderick said operators must “really do our homework,” conducting market research and analysis before starting on grand development plans. At the same time, the relationship between capital providers and operators is changing in ways that require a new level of sophistication, data analysis and information sharing.

Roderick also said it is incumbent upon operators to understand local market dynamics and the end goal of any new development, with insight into the future lease-up velocity to give foresight into future growth. Investors have “gotten much more savvy” to that end, he added.

Frontier’s success in development stemmed from having long-tenured staff focused on new development, while also relying on wage studies, market analysis and competition reports to forecast the viability of a given project.

“You need to tell the story, and you need to do it with confidence,” Roderick said. “That will help attract the capital.”

This new approach of combining more advanced capital providers with well-tuned operators capable of development will define the next phase of senior living construction growth, Clark said. In the next 24 months, Clark believes more companies will kickstart new projects even as acquisitions remain a quick avenue for expanding into new markets.

From a financing and capital perspective, Fasano said capital providers have “to make the next big decision” backing new growth based on partnerships, market presence and past development track records.

“The math has to make sense for that higher return threshold to be hit when you put a shovel in the ground, because there is still risk to it despite demand,” Fasano said. “What goes on in that micro market, how are lenders and capital going to adjust if the plan doesn’t go perfectly? The transaction market is certainly making a very strong case for new development.”

Designs that focus on hospitality, efficiency flexibility

RLPS is managing a range of projects that focus on repositioning existing communities for operators, such as by downsizing skilled nursing in favor of expanding independent living options.

This is forcing changes in how planners and designers view the senior living community of tomorrow, Winters said. Project expansions are targeted to a lifestyle value proposition of senior living that appeals more to the next generation of customer.

Community stakeholders are combining hospitality, flexibility and operational efficiency in new designs, and developers are moving away from rigid care settings in which residents must relocate when needs change. Instead, new communities are being conceived to provide higher levels of care in more residential, hospitality-focused environments, Winters said.

“The senior living community of the future will deliver the care how you want it without asking you to give up the things that you love in order to get it,” Winters said.

Indeed, some operators are creating new development projects with cottages and pocket neighborhoods to create more residential settings with home care offerings to meet care needs.

Operators are also rethinking senior living dining with new projects. In the past, operators focused on having multiple dining venues that required hiring larger culinary teams, but put up against the expense-control constraints seen in recent years, providers are recalibrating concepts with staffing in mind. Instead of adding more dining venues or culinary stations, senior living companies are creating layouts that preserve variety and experience while consolidating the infrastructure necessary to deliver a robust senior living dining experience.

Operational efficiency is also a prominent part of designing communities today, a priority second only to care delivery, Winters said. This means evaluating the movement of culinary supplies, employees and deliveries to coexist and not disrupt daily life for residents.

Aegis Development has taken the need for efficiency to heart, and new Aegis communities are studied down to the number of steps associates and residents would need to take to access certain areas of a new community. Aegis seeks out 80- to 120-unit communities combined with a “secret formula” to determine penetration rates that are “tried and true,” Clark said.

In the years ahead as development growth picks up, Clark said operational efficiency in communities will be an ongoing challenge for operators to make new projects feasible in practice. This will make unit mix, amenity spaces, parking and physical layout vital in determining a project’s future success or failure.

“As we look at our next iteration of development, we’re looking at how many steps everybody is going to be taking in an eight-hour shift and making sure our staff are as efficient as possible in the building,” Clark said. “That’s not been a conversation that I’ve taken part in over my past 20-something years in the industry, and I think that’s a bigger concern from a development perspective is how well the staff are performing in the building.”

Master-planning is also becoming an important part of the development process as owners reassess community needs, amenities and potential areas for growth years before shovels get in the ground, Winters said. For communities built in phases over multiple decades, it is challenging to turn this “patchwork” campus into a unified community that can deliver both lifestyle and care expectations of the next generation of senior living customer.

Frontier Senior Living is adding cottages into its new developments to meet expectations of older adults wanting more lifestyle benefits without an institutionalized healthcare atmosphere. The cottages are an upscale, lower-density entry point for older adults into a broader campus, and can be easily paired with amenities like pools, clubhouses and dog parks.

“When you’re adding that financial horsepower to the entire project and really working your cap rates on the lower side for the cottages, and maybe it steps up a little bit higher as you go through the continuum, it really does economically benefit the project,” Roderick said.

Future development relies on relationships

The next wave of senior living development will be guided by disciplined growth, and developers must contend with construction and financing costs, prolonged approval processes and capital partners needing proof-of-concept before starting a new project.

Fasano said projects will need the right development basis combined with an experienced operator and strong local market understanding to make projects work even as demand outweighs available supply.

“Capital, lenders, they don’t need the perfect business plan, but what I think they do need is somebody who’s experienced, somebody that understands why we’re putting the shovel in the ground, how we’re going to get to that end yield and return and how we’re going to be protected along the way,” Fasano said.

To push development forward, Roderick said operators must “be thoughtful in their future approaches” and remain grounded, relying on market studies, competition analysis and understanding when to walk away from a project if the data doesn’t match up.

Connecting with vendors and third-party firms to create true partnerships will also be critical in the industry’s next development push, Clark said.

“Making sure that we treat our partners not simply as vendors but really somebody that is working towards a common vision is the most important thing that we’re focusing on,” Clark added.