During the development panel at the 2025 Fall NIC conference, a familiar conundrum set the stage—construction activity remains at historic lows due to lack of construction capital availability, volatile costs, scarce land, a difficult labor market, and other challenges. Yet the need is only growing stronger, as the favorable demographics the seniors housing and care industry has long coveted are now on the doorstep.
That refrain was followed by what is becoming a frequent warning—if we don’t find new ways to design, build, gain support for new units, and create them; the void will be filled, it just might be filled by players who do not understand the complexities of care and are focused on profit over purpose. As the moderator summed it up, “that is not the future any of us want.”
Current Outlook
Panelists noted that even those who do have projects planned for 2026 are struggling, as they are having difficulty getting things approved because of tariff uncertainty. Price increases to aluminum, copper, and steel, for example, indicate construction costs remain challenged. Further, the harsh deportation practices are worsening construction labor shortages, as construction sites provide an easy target for that approach. These headwinds are only adding to the already difficult prospect of seniors housing and care development.
On the positive side, the One Big Beautiful Bill Act (OBBA) provides certainty about corporate tax rates that could speed up investment activity. In addition, Republican administrations typically lessen federal regulatory hurdles that could potentially help projects accelerate.
As the next chapter awaits, it is clear that the conventional financing and legacy construction practices that were used for previous decades are no longer going to work, as they are not sufficient to help scale to meet demand. As such, analyzing the following questions are key to unlocking the development quagmire and igniting much-needed momentum.
Who are we Building For?
Tomorrow’s resident has drastically different expectations for the last chapters of their lives than the generations that preceded them. In the past, a leisure-based retirement was preferred, leading to senior living communities being stocked with amenities (a cruise ship on land, as one panelist remarked). Often these communities were gated and in isolated areas away from cities.
The early wave of Baby Boomers entering retirement, however, want service-rich, choice-filled, wellness-focused, self-directed, age-in-place options. The key word that kept emerging is “choice,” as the new senior expects to be able to control and curate a custom experience for their retirement years, just as we have all grown accustomed to in the other parts of our lives. As such, “choice-filled solutions” is an early buzzword for the next chapter of seniors housing development.
What are we Building?
In the last 10 years, there has been a notable rise of a different type of model that is akin to multifamily. It is essentially a for-rent, often built-to-rent, model with a layered program included that consists of amenities and services designed for boomers. These properties are typically urban centered or urban adjacent and are integrated as opposed to isolated, allowing residents to be connected to a vibrant community.
In terms of development specifics, viable layouts given economic challenges include horizontal single-story buildings of approximately 125 units. This model is designed to be nimble so it can be plugged into existing cities or vibrant towns. It is also flexible in that it can be designed in phases.
An unfortunate trend in recent years is a reduction in the amount of square footage devoted to healthcare, which is a direct response to the difficult economics of development. With the higher interest rates and construction costs, organizations have had to focus on the aspect of their business that delivers the strongest margins, which are typically independent living (IL) units. As such, we have seen an increase in IL units, often at the expense of units on the other end of the acuity spectrum.
Where are we Building?
Rent affordability is another common theme discussed not only at the 2025 Fall NIC conference, but at smaller regional conferences. Building seniors housing in secondary and tertiary markets is an effective strategy to improve rent affordability for Baby Boomers because these markets typically offer lower land and construction costs, face less competition for sites, and maintain lower overall operating expenses than major metros. As a result, developers can deliver units with more modest rent levels without sacrificing quality or financial viability.
At the same time, demand in these markets is rising. Large cohorts of retirees actively prefer to age closer to adult children who often live in lower-cost suburbs and smaller cities, and many Baby Boomers are downsizing from single-family homes to rental communities that provide services but not luxury pricing. Unlike dense urban cores where seniors housing has trended toward amenity-rich luxury, secondary and tertiary markets enable product positioning oriented to middle-income seniors — the income band most at risk of rent burdening.
This alignment of cost structure, lifestyle preference, and demographic demand creates a rare supply-demand window: developers can underwrite projects with sustainable rents, residents gain access to attainable options without relocating far from support networks, and communities benefit from stabilized population aging-in-place rather than migratory outflow to more expensive metro settings.
How are we going to Build Differently?
One of the key strategies that is often discussed but has not yet been scaled on a national level is modular construction. As panelists noted, the topic has been bandied around for years, and challenges remain, as many developers want their own design and don’t want to feel like a carbon copy. That said, successful strategies utilizing modular construction are emerging. For example, one can achieve efficiencies by identifying elements of projects that are repeatable and can be manufactured offsite, such as risers or parts of the kitchen. This approach also lends itself to phased projects. Planning early is key, as upfront capital is needed, but if done correctly it can save meaningful costs in the end.
Lining up your partners and agreeing on a strategy as early as possible has many benefits as it shifts decisions to earlier in the timeline, reducing risks. In order to benefit from incorporating modular construction, certain factory schedules have to be made in advance and committed to. When surprises inevitably pop up, costs accumulate, thus starting early and having an experienced general contractor are essential for success.
Bright Future
Despite the gloomy construction outlook of the moment, there remains belief that the strong demographics still make for a positive long-term outlook for seniors housing development. Despite all the challenges, opportunities with upside should be available in the coming years. From adaptive reuse of office and hotels to substantial rehabilitation of older facilities to nonprofits using tax-exempt bonds, there are successful strategies currently being used to develop new units. Yet many more are still needed, and getting active in solving this dilemma will be a main industry focus for the next decade. Those who get shovels in the ground as early as possible will surely reap benefits in the long run.
