Hear more insights on the future of senior housing development at the SHN reBUILD conference in Chicago. Buy tickets here for the event running Nov. 20-21.
Senior living companies have faced challenges with ground-up development in 2023 and 2024. Despite rapidly evolving market conditions, development projects are still a daunting task as we approach a new year.
Leading up to last year’s BUILD conference, the industry was filled with uncertainty about the future of senior living development. With the upcoming reBUILD conference in Chicago, the struggle to kickstart development projects still persists.
IntegraCare CEO Larry Rouvelas and Charter Senior Living CEO Keven Bennema, two key panelists at the event, share insights on the difficulty of development this year compared to last. While the landscape remains tough, there is still room for growth through innovative thinking.
Starting projects requires creativity, current development ‘ahead of the curve’
In the past four years, senior living operators have leaned on longstanding capital relationships to drive growth, even if it means reinvesting in existing properties rather than new construction.
Charter Senior Living has maintained an active pipeline of new developments in secondary markets, thanks to a solid partnership with DMK Development Group. Their efficient development model enables them to generate interest from depositors early on.
By focusing on efficient design and strategic site selection, Charter Senior Living has been able to start six new projects this year and plans to continue this trend in 2025.
Although the market remains challenging, operators who take a proactive approach to development stand to benefit in the long run.
‘Still a challenging market’
IntegraCare has opted for memory care conversions rather than new construction in response to the tough development landscape. High construction costs and limited financing options pose significant barriers to new projects.
Bennema and Rouvelas agree that focusing on tertiary markets with lower barriers to entry is a viable strategy for overcoming development challenges. Market research indicates that these markets offer promising demographics for senior living growth.
Despite the hurdles, both IntegraCare and Charter Senior Living remain optimistic about the future of senior living development. By staying agile and innovative, operators can position themselves for success in 2025.
Outlook starts slow but pace could quicken in 2025
Looking ahead, Rouvelas and Bennema anticipate a gradual uptick in construction activity by late 2025. As operators become more willing to take on new projects, the industry could see a surge in development in the second and third quarters of the year.
While challenges remain, operators who adapt to the evolving landscape and focus on efficiency may find success in the coming year. By staying ahead of the curve and leveraging their experience, senior living companies can navigate the complexities of the market and thrive in 2025.
