Senior Living Industry Grapples With Dual Challenge Of Development Freeze, Aging Properties

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Almost half of all senior living communities in the U.S. are 25 years old or older, and the rate of new construction is at a low not seen since 2012. Senior living inventory is actually decreasing in a handful of markets.

Those are big problems for the future of the industry, which is gearing up to serve a new generation of residents in the years to come. Those residents may not be satisfied with communities that, in some cases, served members of their parents’ generation.

There are “more distressed and obsolete properties now than there used to be, and that’s because some of this first-generation product just isn’t cutting it anymore,” HealthTrust Chief Operating Officer Colleen Blumenthal told my colleague Austin Montgomery in May.

With regard to new construction, the senior living industry faces a financial math problem for which there is no easy solution. Projects must balance cost with the rates an operator will charge at the end of the day. But as Welltower CEO Shankh Mitra pointed out earlier this year, some new projects would have to charge upwards of between $11,000 and $13,000 per month in rental rates in order to make them pencil out, which is a price far too high for many residents.

That isn’t to say that new projects aren’t underwriting and moving forward. Companies including Belmont Village – a high-end operator with a more affluent resident base that can pay higher rates – have found more suitable conditions for new projects by working with longtime lenders.

Still, the fact remains that not every operator can follow in the footsteps of Belmont Village, a company with a 25-year history and a seasoned veteran at the helm. To that end, I do think that senior living operators will have opportunities to find new uses for older buildings with renovations that alter unit mix and amenities. That won’t be enough to fulfill the sheer wall of demand ahead, but it may help forestall an outcome where senior living communities are leaving money on the table in the form of unmet demand from boomers.

In this members-only SHN+ Update, I analyze how operators are making do during the development slow period and offer the following takeaways:

• Opportunities to grow without breaking ground on a new community
• What newer residents want from senior living operators and how they are catering to those needs
• How shrinking inventory in some markets could impact the industry’s ability to grow

Making the most of a frozen growth market

An unfavorable cost of new projects – from capital to construction materials and labor – is stymying senior living growth in 2025. Senior living companies broke ground on just 17,000 units in the third quarter of 2025, representing levels last seen in early 2012, according to the latest NIC data.

Fewer than 1,400 new units opened in the third quarter of this year, and inventory growth remained well below 1%, “setting new record lows since NIC MAP began tracking this data in 2007.”

There are companies developing anew in addition to the likes of Belmont Village. For example, Boston-based Rogerson Communities, is planning to add around 1,000 units of affordable senior housing and market-rate senior living. The company’s CEO believes doing so is important to keep the real estate cycle turning for the incoming generation of residents.

“If you’re acquiring something that’s already senior living or already affordable housing, you’re not solving the problem of there being a shortage of affordable housing and senior living facilities or communities,” Rogerson CEO Walter Ramos told me.

Updates and renovations to communities are a perennial favorite tool in operators’ toolbelts to help make them more appealing to a new generation of residents.

For example, Sunshine Retirement Communities invested over $1 million at a community with upgrades to a dining room to bring it up to a modern aesthetic.

The incoming generation of older adults also desires larger units, and operators including Belmont Village are in some cases renovating and combining existing spaces to meet those preferences.

In general, operators are in 2025 renovating communities with health, wellness and care in mind. FellowshipLife, for example, has built out its fitness centers and outdoor activity areas to appeal to the desires of more active seniors. The nonprofit also brought in a physician medical practice to its campuses.

I see those trends in recent projects like that of Plymouth Place, a life plan community in La Grange, Illinois, that won a 2024 Senior Housing News Architecture and Design Award in the best repositioning category.

The community had to transform itself to keep up with both rising local competition and the wants and needs of the baby boomer generation. To do so, it had to bring in enhanced wellness programming, improve dining operations and modifying living spaces with a construction budget of $69.2 million.

Those trends are also visible in projects from organizations like Ingleside, which is leaning on partnerships to improve its aging technology infrastructure by bolstering cell phone and internet service.

Sonida Senior Living (NYSE: SNDA) and Presbyterian Homes and Services are also prioritizing technology upgrades such as better Wi-Fi and cable service. Sonida also enhances its outdoor and wellness spaces to promote longevity of its residents.

Sonida typically invests around $1 million for standard renovations outside of apartments. Presbyterian Homes & Services has to budget between $20,000 and $30,000 per door when going into an apartment for updates, and to save on the amount it spends preserving older communities, focuses on accurate and repeatable processes.

Still, renovation projects can only meet so much of the market. In the coming years, tens of millions of baby boomers will age into senior living. If the industry can’t grow the number of communities to meet that demand, the boomers may well create what they want for themselves.

‘We’re going backward’

Despite its best efforts to grow for a new generation, the senior living industry is in multiple markets heading in the wrong direction to serve them.

Inventory declined in 8 of the 31 primary markets NIC tracks in the last three years. Most of the units shed were either independent living or assisted living. San Antonio, Texas; Pittsburgh, Pennsylvania, Tampa, Florida; and Riverside, and San Diego, California, contributed the lion’s share of those declines.

All of this is leading to a double challenge for the industry, where the rate of new inventory is not enough to meet demand projected by 2030, according to Omar Zahraoui Senior Principal at NIC.

This is particularly concerning given the time it takes to build a new community is also on the rise, now reaching an average timeline of 29 months. If operators begin building today, it’s still going to take more than two years before the doors open to ease the pressure.

“We’re no longer just slowing growth in some markets. We’re going backward,” he said.

During BUILD, Frontier Senior Living CEO said he is “seeing some builders out there building huge buildings, which is great.”

“They need them,” Roderick said at BUILD. “But we need quite a few more in pretty much every market, it seems, to hit this demand.”

The good news is that, according to Zahraoui’s data, periods where construction dips below 1% of existing inventory have in the past preceded a development uptick in the next five years.

If – or maybe more accurately, when – that happens, I think the industry should heed similar lessons as in past periods, such as in the period after the Great Financial Crisis, where the industry got into a cycle of overbuilding.

“The trick here is not to overbuild ourselves, like every asset class when the times get good,” Will said during BUILD. “We need to look at this very promising period for senior housing, but be somewhat circumspect and careful about what we create and why.”

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