Senior living operators are strategically approaching resident rate increases in 2025 due to higher revenue and lower costs, resulting in improved margins. In 2024, many operators implemented steep rate increases for private-pay senior living units, some even reaching double digits. Looking forward to 2025, factors such as increased occupancy and longer length of stay have boosted revenue, giving operators more flexibility in setting annual rate increases.
However, challenges in operations, along with inflationary pressures in expenses like staffing and food costs, are expected to persist in 2025. Determining the optimal rental rate for a portfolio will vary based on market conditions, community demographics, and competition.
Operators, such as Discovery Senior Living, Distinctive Living, Treplus Communities, Solera Senior Living, Willow Ridge Senior Living, and CC Young, are planning to set rental rates closer to pre-pandemic levels, averaging between 3% and 8% for 2025. They may still implement double-digit increases in competitive markets.
Operators have seen improved operating margins over the past few years, balancing rising acuity levels with associated costs. Discovery Senior Living, for example, saw significant margin improvement in 2024, allowing them to pass on rate increases across the U.S. In 2025, Discovery plans for double-digit rate increases in select primary markets.
Distinctive Living, based in Freehold, New Jersey, has continued to drive rate increases of up to 15% in competitive markets by investing in community enhancements and healthcare services. However, showing value to customers remains crucial.
Solera Senior Living, based in Denver, is implementing a varied approach to rate increases in 2025 based on market characteristics. They aim to deliver above historical level increases in competitive markets while enhancing services.
Treplus Communities in Columbus, Ohio, has experienced success with rate renewals, averaging 4% in 2024. Willow Ridge in Albany, New York, is taking a cautious approach with a 6% average rate increase across its portfolio to ensure stability.
Recent industry data shows a decrease in rate growth compared to previous years, with independent living, assisted living, and memory care operators increasing rates by an average of 4-5% in 2025. Nonprofit providers have also seen modest increases, signaling a shift towards a more conservative approach to rate setting in the senior living industry for the year ahead.
