Glimmers of Recovery in New Seniors Construction Report

Construction starts of seniors housing and nursing care facilities are up over last year, but still remain well below the pre-recession peaks hit in 2008, according to a new industry report.

A total of 39,070 units were under construction at the end of March 2011, according to the Seniors Housing Construction Trends Report 2011. The units are distributed among 320 new properties and 146 expansions of existing properties. About half of the units are in seniors apartments, largely made up of subsidized buildings.

Construction of seniors housing, composed mostly of market-rate independent, assisted living and nursing care buildings, was up 55 percent year-over-year to 14,942 units. That total is still down 36.9 percent from the peak of more than 23,000 units in the year ending in March 2008.

“This is really a modest amount of new construction,” says David Schless, president of the American Seniors Housing Association (ASHA), which produces the annual report in collaboration with the National Investment Center for the Seniors Housing & Care Industry (NIC). “Until the capital markets change and the economy improves, we expect to see relatively muted levels of construction of market-rate seniors housing.”

Senior apartments make up 49 percent of units under way. (Only 8 percent of those are considered market-rate properties.) Independent living properties account for 20 percent of the new units, followed by assisted living (16 percent) and nursing care buildings (15 percent).

Despite the growing population of seniors who might want to move to a new retirement building, no one expects seniors housing to reach the construction levels hit in the 1990s during the industry’s period of greatest growth. In 1998, for example, the industry added about 57,800 new units (excluding senior apartments). “There was a real lease-up issue back then in a lot of markets,” notes Schless.

Read the full article on NREI.

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