By Hayden Spiess
Just as one swallow does not make a summer, the development projects currently underway do not equate to an overall recovery in activity. Similarly, strong demographic trends don’t ensure favorable market conditions for the construction of new communities.
These points have been amply proven by the current dynamic in the seniors housing sector. Baby boomers are aging in robust numbers, and the need for seniors housing units is increasing, but development activity remains depressed.
According to sources, a number of headwinds — including stubbornly elevated interest rates, lender caution and high building costs — continue to suppress new unit starts, despite the ample demand for senior living residences.
Even so, some developers are employing their acumen and creative strategies to get some projects to pencil out. Furthermore, industry experts are hopeful that improved levels of development are on the horizon, and developers are positioning themselves to hit the ground running as conditions improve and tailwinds show the promise of outweighing headwinds in the not-too-distant future.
Dearth of Development
According to NIC MAP, the data platform arm of the National Investment Center for Seniors Housing & Care (NIC), new seniors housing unit starts in 2025 reached their lowest level of the past 10 years. New construction starts in the 31 primary markets totaled 5,977 units in 2025. This offers a stark contrast to 10 years prior. In 2015, construction began on 25,285 new units.
“The delivery of new supply was at an all-time low in 2025,” says Chuck Murphy, executive vice president and senior managing director of Des Moines, Iowa-based LCS Development. “And really…2024 was not much better.”
There is a distinct disconnect between the level of supply and the projected number of seniors housing units that will be required over the coming years. NIC has predicted that an additional 806,000 units will be needed by 2030.
“You’re getting 10,000 people a day that are turning age 65,” points out Jim Biggs, chief development officer at Momentum Senior Living. Momentum, which is based in Irvine, California, offers real estate development strategies and “operations development” services as a third-party management company.
Al Fernandez, chief executive officer and principal of ANF Development, neatly encapsulates the dissonance within the sector. “In contrast with other sectors of commercial real estate, senior living shows improving occupancy and investor interest, but far fewer new projects breaking ground,” summarizes Fernandez. “The result is a widening supply gap.”
“Supply and demand are at a real tipping point, especially in these high-barrier-to-entry markets where occupancy may be 90-plus percent and there is no new supply coming in,” points out Joe Jedlowski, chairman and chief executive officer of Distinctive Living.
Hurdles to New Housing
These depressed development figures are not entirely surprising when considered in the context of the challenges currently facing seniors housing developers.
Jerry Frumm, vice chairman and chief investment officer of Senior Lifestyle Corp., cites high development costs and the availability (or lack thereof) of capital as two of the main factors influencing the drop in new unit starts.
“Debt became a little less available and equity became more expensive, on top of the construction cost challenges,” adds Murphy.
Sean Sands, chief development officer of Baltimore-based Erickson Senior Living, a developer and operator of continuing care retirement communities, agrees that access to capital is one of the primary issues facing would-be senior living developers.
“Many lenders are still cautious about financing new construction,” shares Sands. “Financing for new developments has largely been concentrated among a select group of developers with strong, proven track records.”
This hesitancy reflects the fact that the challenges do not cease once construction has been completed on a new community. “Lenders are more cautious with senior living projects than with multifamily projects due to the operational component,” Fernandez divulges, noting “the difficulty of operating senior living communities in today’s staffing and regulatory environment.”
Selectivity among lenders has been the experience of Distinctive’s Jedlowski as well. “Capital is much more interested in a good operator, a good sponsor that has a positive demonstrated record of success, both in development and operating,” observes Jedlowski.
In addition to being a developer, Distinctive Living is a prominent seniors housing operator. The company ranked as the 36th largest senior living operator in the 2025 edition of the ASHA 50 with a portfolio of 48 properties and 5,892 units.
According to Jedlowski, this has made Distinctive more attractive to lenders and other sources of capital. “They like that we are not just a developer or co-developer,” explains Jedlowski. “We actually have to live with providing the results of the operator.”
“Savvy investors understand that having an experienced operator is even more critical than having a seasoned developer,” notes Sands.
Rental Rate Restraints
One major challenge is that rental rates can’t keep up with the cost increases facing developers and operators, according to multiple sources. “Rising construction costs, interest rates, expenses going up — we can’t match them with our market rates yet,” laments Dan Williams, CEO at ONELIFE Senior Living.
“Much of the conversation is about whether a local market can support the monthly fees needed to achieve the risk-adjusted returns necessary to justify a new community,” corroborates Frumm.
“Investors want the returns that we used to get back in 2014 and 2015, and the projects that we do just aren’t penciling,” adds Williams. He observes that many luxury senior living companies are able to execute development deals precisely because extremely elevated rents are built into the model and product type. “They do those projects knowing that they’re going to go in and charge these really high rates.”
Pressure to Pivot
In the face of these headwinds, some companies have ceased new development activity. Where construction levels have lagged, acquisitions have been aplenty.
“There are still a lot of distressed properties,” leading companies to look for deals on acquisitions rather than execute challenging developments, according to Joe Jasmon, chief executive officer and managing partner of American Healthcare Management Group.
“Everybody wants to buy the five-year-old community that wasn’t successful for half of what the replacement cost is,” divulges Williams. “We’re still in the mindset that through all of 2026, our plan is to look for and complete more acquisitions.”
Redevelopment projects also offer something of an alternative to new developments. “In many cases, repositioning or expanding existing communities is more feasible than ground-up construction due to cost pressures,” says Fernandez.
“Meeting the silver tsunami is not just about new supply, but keeping the existing supply in a good place,” adds LCS Development’s Murphy.
“If you think back to the ’80s and ’90s, there was dramatic growth,” details Murphy. “Those communities now need reinvestment. They don’t need to be torn down, but they need to be maybe expanded and reconfigured in terms of the space and how they’re serving residents.”
LCS executed a number of renovation and expansion projects in 2025. In August, the firm celebrated the topping out of a $90 million expansion project at Cypress Glen, a senior living community located in Greenville, North Carolina.
In November, extensive renovations at Blakehurst Senior Living, a continuing care retirement community in Towson, Maryland, were completed. The project included the addition of a new dining venue, enlargement and redesign of the main lobby, enhancements to outdoor dining areas, improvements to amenity areas and other upgrades.
In September 2025, LCS broke ground on an expansion at Greenwood Village South in Greenwood, Indiana. Upon completion, which is scheduled for summer 2027, the expansion will comprise a natatorium, coffee shop and bistro, library, game room, fitness center, courtyard, classroom space, administrative and marketing suite and a 275-seat auditorium.
Building Has Benefits
Building new communities from the ground up — as opposed to renovations and value-add projects — does come with a number of benefits, Williams acknowledges.
For one, new construction allows developers and operators to tailor communities to the tastes and needs of incoming residents.
“Baby boomers know what they want, and they expect it as well,” points out Novelli of LCS. They’re not just going to settle anymore; that’s what their parents did.”
“The generation coming into our buildings now is not going to accept the old generation’s idea of seniors housing,” concurs Williams.
According to the sources interviewed for this article, common expectations among prospective boomer residents include large units, as well as abundant amenities focused on wellness.
Some Developers Still Find Success
Even in a development landscape littered with difficulties, a number of developers are managing to get projects to pencil out.
“While much of the seniors housing industry has scaled back development, Erickson Senior Living has maintained steady progress,” shares Sands. “Over the past five years, Erickson has delivered more than 4,000 new units. In 2025 alone, we delivered more than 900 new units to the market.”
Erickson’s new units included those at The Grandview, an upscale CCRC community opened last year in Bethesda, Maryland. Situated on a 33-acre campus, The Grandview currently comprises one building with 245 units, with an additional, 243-unit building to be completed this year.
“It’s been a busy year for us,” echoes Dan Novelli, director of development at LCS.
“Our philosophy has always been pedal to the metal when everyone else was hands off,” Jedlowski says of Distinctive, which is currently moving forward with projects just south of New York City and in Vineland, New Jersey. Jedlowski says that his company targets markets with demonstrably high occupancy and rent levels.
Distinctive is also interested in serving the middle market. “We recognize that of the baby boomer consumers, a large part of that is the middle market,” says Jedlowski.
“We’ve gotten creative with our development models to figure out how, in a market that averages $7,500 monthly rent, to provide a product that is $4,500, which is much more affordable to someone that is in the middle market,” explains Jedlowski.
One solution that lowers costs and shortens timelines is modular construction.
Fernandez agrees that the middle market subsector offers opportunity for developers and operators. “Communities that target the middle market with efficient design and flexible service models show promise, as this segment is deeply underserved,” he argues.
Looking Ahead
“I do think in the next 12 months, the next 24 months, we are going to start coming out of the gate,” predicts Jedlowski. “We have several groundbreakings that are already scheduled. We’re excited about that.”
Jedlowski has also observed increasing interest in development among other companies. “There are other groups that are inquiring about us and our development services,” he shares.
ONELIFE is among the entities looking forward to restarting new construction. “I think that by 2027, it will open up more for a lot of operators, including us,” says Williams.
“We anticipate development activity will begin to increase in 2026,” states Sands. “However, this may not translate into a significant rise in construction starts immediately, given the lengthy predevelopment timelines required before projects break ground.”
Biggs uses racing imagery when discussing the outlook for development activity moving forward. “Everybody is warming their engines up, warming the tires up, so that when everything falls into place, everybody can just take off and race,” he says, evoking Formula One. “In all this time, I’ve never seen a period since 1988 where there’s been more pent-up activity.”
— This article originally appeared in the February-March 2026 issue of Seniors Housing Business magazine.