Senior Living Industry Could Fall Short of Projected Demand at Current Construction Rates

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The senior living industry could be in need of over 200,000 new units by 2025, a figure that at current construction rates, remains out of reach presently. 

That projection comes from a recent article by the National Investment Center for Seniors Housing and Care (NIC) that highlights the impending gap between new development and impending demand as the first Baby Boomers turn 80 in 2025. This results in a need for $400 billion in new investment by 2030 to keep pace, and at the current rate, only 40% of that investment is currently on track, NIC MAP Vision data shows. 

On Friday, NIC’s Lisa McCracken, who recently joined the organization as head of research and analytics, told SHN that demand outpacing supply and its balance will be a “very interesting dynamic” to watch this year and beyond. The pace at which construction ticks up will be dependent on the Federal Reserve’s timing of the announced interest rate cuts expected later this year.


“We know that the development cycle has lengthened in recent years, so even with some initial rate cuts, it is probably going to be a period of time until we start to see some meaningful movement in the new construction starts,” McCracken told SHN.

This comes as last year was a record low for new development starts, the industry’s pace on development must quicken, the NIC report shows. Over the better part of three years, the industry has faced lending and equity challenges as interest rates have remained unfavorable. While a minority of development and operating partners have continued to push ahead on new projects, many have stayed put.

By 2040, the article forecasts, it’s possible that the current investment pace would “barely exceed a quarter of the required investment needed” for the industry to keep pace with demand.


While potentially leading to increased occupancy within existing portfolios, a lack of new construction could hinder market penetration in the future. To tread water and keep the same penetration rate, the industry will need “significant near-term growth” in new inventory, McCracken noted.

When looking at those 80 and older, NIC MAP Vision data calls for a need of 156,000 additional units by 2025, 549,000 by 2028 and 806,000 by 2030.

“The projected gap between available and needed senior housing units will be significant. Whether looking at the 75+ or 80+ population, this pattern emerges,” McCracken wrote.

This comes as residents are living longer, healthier lives, which puts operators in a position to provide expanded wellness and lifestyle options for an evolving and more-engaged resident.

In 2023, NIC estimated there were 5,000 new units under construction per quarter, but even if construction increases rapidly, it still might not keep up with impending demand due to the one-to-two-year timeline most projects take to complete from earth work to grand opening.

That could put older adults in a tough position to find available—and affordable—senior living options, leading to settling on the quality or location of their future permanent residence, McCracken wrote.

McCracken added that this could lead to a “chasm between two cliffs” for the industry.

“On one side, we have the current development pace, moving steadily but perhaps too slowly, attempting to construct new units and facilities for seniors. On the opposite cliff, we see the relentless march of time and demographic change, with the 80+ age group growing at a pace that outstrips the current rate of housing development,” she writes in the full text, available here

As the outlook for the industry remains positive based on recent past recovery and operators bullish on demand, McCracken added that there’s an “undeniable sense of optimism coupled with a drastic sense of urgency.”

“We anticipate that the new development is going to remain muted until rates start to come down and when we can better mitigate some of the construction headwinds,” McCracken told SHN.

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