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The senior living landscape is ripe for development thanks to market fundamentals, extended construction timelines and growing occupancy, according to experts with the National Investment Center for Seniors Housing & Care.

NIC Principal Omar Zar (Zahraoui) shared insights from the recently released Senior Housing Analyst Review and Outlook, or SHARK, report during a NIC Academy webinar on Thursday focusing on senior living development. 

The recent surge in demand for needs-based senior living — assisted living and memory care communities — suggest a “new normal” rather than pent-up demand, Zar said. Senior living occupancy is expected to grow 8% to 14% from 2023 to 2026, two to three times the projected inventory growth rate. NIC data predict that most regions will achieve occupancy rates in the mid-90% range by 2026.

Senior living construction starts have declined for four consecutive years, largely due to an increasingly challenged lending environment, higher interest rates, inflation and volatile capital markets, Zar said.

On the supply side, senior living inventory grew 3.2% from 2017 to 2019, compared with 1.3% from 2021 to 2023. Zar said that the current moderate new supply trend provided a short-term occupancy boost, but it could cause potential future headwinds for the sector because 44% of all senior living properties are 25 years or older. 

The time is now

Joe Daniels, vice president of business development at Direct Supply Aptura and a NIC Academy instructor, said that with the oldest baby boomers moving into properties and the lack of new supply coming onto the market, a strong argument can be made that now is the time to be planning new senior living developments for the future.

“There have never been more options for seniors than there are today,” Daniels said. “Getting this market demand piece, capturing that locality in the market and where seniors want to live, is a critical piece.”

The key to successful outcomes, he said, is building adaptability. Developers need to build buildings that are flexible, with spaces that can serve different purposes in creative ways. Much can happen over the 24 to 26 months it takes to open a building, he said. 

“If you’re not thinking about the future, thinking about what could make us irrelevant when we open our doors, you’re doing the building and community a disservice,” Daniels said, adding that developers need to have practices in place to ensure that they are putting themselves in a position to capture consumer preferences as residents move into a building.

Gaurie Rodman, vice president of real estate strategy and development for Direct Supply Aptura and a NIC Academy instructor, said that building adaptability means being thoughtful and understanding the needs of the consumer. Senior housing, she said, is in the business of delivering care and lifestyle, but those are always changing.

Designing for the future, Rodman said, means choosing where to spend money to get the biggest design bang. That means understanding the marketplace and the consumer and “setting yourself up for a building that will come out of the ground and be pertinent from day one.” 

Senior living, Zar said, is on the cusp of a “notable upswing” driven by anticipated demographics and demand expansion. Potential challenges remain, however, including aging inventory, potential supply shortfalls and lengthy construction timelines. 

“It’s an exciting time to be in this space,” Zar said. “Our industry is where innovation meets compassion.”

He added it’s important to recognize that operators, developers, capital providers, investors and service providers are actively influencing change.

“It’s not just that the market is changing, but you are changing the market,” Zar said.