By Hayden Spiess
CHICAGO — Philip Kroskin, head of real estate and senior vice president of investments with Sunrise Senior Living, has a message for those who are reluctant to invest in seniors housing development: “Why are you being so stupid?”
Kroskin’s blunt question came during a recent two-day InterFace event at the Swissotel Chicago. Taking place June 24-25, the InterFace Seniors Housing Midwest conference drew 215 attendees and featured a number of panel sessions.
Joining Kroskin on stage for a panel titled “When Will Development Rebound?” during the first evening of the conference were Paul Branin, executive vice president of growth for Health Dimensions Group; Mike Mattingly, principal and co-founder of Avenue Development; Greg Markvluwer, vice president of real estate development at Erdman; and moderator Erin Berry, director of interior design Direct Supply Aptura.
Development Deterrents
Kroskin’s somewhat damning query was not to suggest that economic and logistical difficulties — such as heightened interest rates and labor costs — do not pose a valid deterrent. Panelists acknowledged these challenges throughout the course of session. “The last five years have been nothing short of hell in terms of real estate development,” vented Mattingly.
To begin the panel, Berry outlined the current disconnect between supply and demand in the seniors housing space, noting that the gap between the two is only projected to grow as a consequence of depressed development starts.
“Demand is up, but construction starts are at a historical low,” shared Berry. “Even as our communities are filling up, we’re barely building.” Speaking to the supply gap, she noted that there will be a $275 billion gap in inventory by 2030. This figure can be found in a “Senior Housing Investment Outlook” published by Argentum in May 2025.
Berry then had a question of her own. “So why, then, are we not building? If we know the need is there, what is making us not build?” she asked.
One explanation, according to Kroskin, is the position of private equity coming out of the COVID pandemic. Kroskin asserts that private equity shops were either “licking their wounds from COVID-era buildings that failed” or interested in buying existing, distressed properties. “If they could invest opportunistic capital and get mid-teens returns without having to do development, then obviously that the direction that they were going to go, and they did,” he elaborated.
There are also additional economic headwinds depressing the rate of development. “Inflation hit pretty dramatically, and we saw significant increases in expenses,” said Kroskin. “The cost to build went through the roof, dramatically. The cost to buy land didn’t change, because everybody thought they had more value in their land, and they weren’t ready to capitulate yet.”
Achieving Awareness
One antidote to the lack of investment in new development is to educate would-be investors, posited Mattingly, who echoed Kroskin’s confidence in the strength of the senior living industry. “We outperform all the other asset classes,” he stated. “Those [investors] that have been in the space understand this,” Mattingly continued, adding that “educating the new investor” on the nature of seniors housing is crucial.
Branin concurred. “If you can do mergers and acquisitions, you can do new development, but new development has to come with a lot of education prior to putting a shovel on the ground,” he agreed. He expounded that one key component of this “education process really starts with reading the feasibility report.” (Feasibility reports assess the practicality of proposed projects.)
Nevertheless, Development Persisted
Though headwinds persist and some in the industry still balk at the costs and risks that are inherent to construction, there is not a total paucity of development projects within the industry.
Mattingly, who divulged that Avenue is currently underway on a new facility in Rockford, Illinois, said that the project is possible in part due to local incentives. “We had seven-figure savings just in some of the incentives we picked up,” Mattingly shared. “That was a tremendous win for us to get that project over the hurdle and get debt and equity to really come around.”
While Health Dimensions Group is not engaged in development projects at the moment, Branin said that there are “plans to do some in the future.
“Like the rest of the panelists, we’re on the cusp of something really big with new development coming on,” he enthused.
Driven by Demand
Whatever roadblocks it may face, new development is critical to meet the robust need for seniors housing units moving forward, panelists affirmed.
One simple reason for this growing demand is the wave of aging baby boomers. “We all know that the baby boomers are looking for a new product, and the product that’s 15, sometimes even 10 years old, isn’t necessarily what they’re looking for today,” shared Markvluwer.
Beyond the mere abundance of aging seniors, there are specific trends contributing to the need for senior living options, as Kroskin pointed out. He noted that there are increasing rates of divorce and Alzheimer’s, as well a decrease in the number of adult caregivers. “Our biggest competition is home; everybody wants to stay home,” said Kroskin. “Well, they can’t stay home if they don’t have a spouse to take care of them, if they don’t have a child to take care of them, if their needs are so great because of Alzheimer’s.”
On a more positive note, he also gestured to the fact that the boomer generation has more wealth with which to afford seniors housing, which will help fuel returns on future projects.
Ultimately, the panelists concluded that those who take the leap into seniors housing development will be amply rewarded.
Predicted Kroskin, “We will look back in five years and say ‘God, those people who invested in 2025…they were smart.’”