Senior living construction costs will average 3 to 6% more in 2024 compared with 2023, although costs will vary by market, according to a special issue brief by The Weitz Co. prepared for the American Seniors Housing Association. 

The per-square-foot cost of construction this winter has averaged $236 to $367 per gross square foot in independent living, depending on materials and finishes used, according to the brief. That’s compared with $227 to $245 per gross square foot in winter 2023.

Costs in assisted living this year, meanwhile, have averaged $272 to $444 per gross square foot, compared to $263 to $429 per gross square foot last winter. And costs in skilled nursing have averaged $312 to $496 per gross square foot this year, compared with $302 to $479 per gross square foot a year ago.

Meanwhile, some sectors will experience slower growth, whereas others will see stable or increasing growth. 

“The Architectural Billing Index, Construction Confidence Index and Backlog are lagging from the previous quarters,” wrote authors Larry Grave, Ann Burk and Jeff Claeys. The multifamily, office building, entertainment and retail sectors are experiencing the slowest growth, whereas growth in the healthcare, distribution center, higher education and transportation sectors growth is stable or increasing, they said.

The biggest challenge to the construction market as a whole remains a shortage of skilled labor, according to a construction market report written by Graeve and Kyle Wegner and released by Weitz at the same time as the brief. That challenge doesn’t appear to be reversing anytime soon, according to the experts, as there are more skilled workers retiring than there are new workers entering the field.

“This has a negative effect on productivity, as new workers are still learning their craft and do not know all the tricks of trade. There tends to be more re-work occurring due to the decrease in skill level and expertise,” according to the authors.

“Additionally, the labor shortage forces longer work days, thus overtime costs are incurred to keep projects on schedule,” they added. “When wages increase 3% to 4%, the actual cost of the labor component is closer to a 10% increase due to lower productivity, rework and overtime.”

The data in the construction market report come from the Federal Open Market committee meeting held Dec. 12 and 13.