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In 2025, senior living development is anything but active as new construction starts have hit levels not seen since the Great Financial Crisis. Financing for new projects is still a big obstacle, but senior living companies are optimistic that will soon change as certain lenders warm to certain new projects.
Holding most operators back from breaking ground on new projects are several forces that make the math hard to pencil out, including a current increased cost of construction materials, lingering supply chain issues and tariff worries. Financing also represents a big collective thorn in developers’ sides.
While companies still struggle to source equity for new projects, lenders are warming up to doling out financing for the “right borrowers and projects” with a clear path forward toward profitability and lease-up, according to Aaron Rosenzweig, senior managing director of JLL Capital Markets.
“With a small subset of investors, development is not the automatic ‘no’ that it was 12 months ago,” Rosenzweig told Senior Housing News.
Despite those hopes, the latest data shows lending for new construction projects is still relatively frozen at this point in 2025. At the same time, the senior living industry faces a wave of obsolete properties that will likely not serve the incoming generation’s needs and wants, necessitating new construction.
But that doesn’t mean senior living companies aren’t notching some new development deals. Companies including Brightview Senior Living are leaning on their relationships with investors to get new communities in the ground.
Signs of life in lending, prompting hopes for more development
While the senior living industry hopes for a development upstick to help meet surging demand in the years ahead, the latest data shows lenders are not yet opening up the floodgates. But leaders in the senior living industry believe those conditions are slowly shifting.
In the first quarter of 2025, the senior living industry added 1,890 units of total new inventory, and began construction on 1,085 units, representing near-historic lows for the industry, according to data from the National Investment Center for Seniors Housing and Care (NIC). In 2025, for every 27 units occupied, the industry is only building 10.
Construction loans as a whole remained “subdued” in the second half of 2024 compared to historical trends, with a brief uptick in the third quarter before dropping in the fourth, according to NIC.
The senior living industry is simultaneously grappling with the fact that nearly two-thirds of communities are 17 years or older. That crosscurrent of high demand and an aging number of properties should in theory lead to an uptick in new development projects, but lending has remained relatively frozen in 2025.
As Welltower CEO Shankh Mitra pointed out earlier this year, the simple math of M&A versus new development is pushing investors and lenders toward acquisition-heavy growth strategies.
Mitra outlined a hypothetical project with a development cost of $450,000 per unit and a stabilized yield on cost of between 8% and 9.5%. Under those assumptions, senior living companies would have to achieve a revenue per occupied unit (RevPOR) of between $11,000 and $13,000 to make the project pencil out in the end. He added that a developer might build something today on a cost basis of a dollar and sell it for just 70 cents down the road. Meanwhile, many communities are still trading at prices below replacement cost.
All of those conditions have made lenders more wary of new construction. But they are in 2025 becoming more bullish in their underwriting on the prospect of the demand and more favorable development conditions ahead, according to Samantha Eckhout, senior vice president of development and strategic growth for Redico and its senior living affiliate American House Senior Living.
Construction costs are stabilizing, and there are a fewer number of “basement bargain” deals on the M&A market, she said. That is pushing the cost of a new acquisition closer to a new-build.
“We’re going to be developing differently than we did before,” Eckhout said. “I think that it’s going to be slow, though, as acquisition opportunities are still out there, and we see that sort of flip over to a development setting.”
Banks are also in 2025 offering more construction loans, albeit in smaller amounts than previously seen, according to Greg Roderick, president and CEO of Frontier Senior Living.
“It’s a few hundred million per bank, which is great, but ultimately, the demand is going to be far greater than that before too long,” Roderick said.
In 2025, he hears a “rumbling”: Lenders waking up from their long slumber en masse.
“Lending is finally coming back,” Roderick said. “There was a real contraction in lender interest in new construction. This year, there’s a lot of new interest, and a lot of dollars being set aside for it, which is wonderful.”
While capital investors and lenders are more active in 2025, they are seeking out developers they trust and have previous relationships with, according to Tami Cummings, chief operating officer of Dallas, Texas-based developer Silverstone Senior Living.
“Senior living development will be slow but starting to pick up,” Cummings told Senior Housing News. “The years since Covid were really tough for senior living operators and markets, so capital investors and lenders are just more selective.”
But the costs and conditions of senior living development are still “super volatile,” according to Anthem Memory Care CEO Isaac Scott. Although he believes financial markets are warming up, he also has observed how the cost of building a property is now as much as “double” as it was just five years ago. .
“Rents didn’t go up double in five years … the margin on a development project has just shrunk dramatically,” he said.
Looking ahead, senior living developers of new projects have to walk a tightrope and balance both the need to develop anew with the costs they are passing on to their residents. And although many in the industry had hoped that 2025 would be the year development took off, that has so far not happened.
“By 2026, stronger demand, combined with a potential undersupply of new inventory, is expected to drive upward pressure on pricing, and developers will need to take a thoughtful approach aligning rising development costs with affordable rent,” NIC Senior Principal Omar Zahraoui wrote last month.
Leaning on relationships to grow
Baltimore, Maryland-based Brightview Senior Living has sought to continue developing communities annually since its inception 25 years ago, with a target between two and four communities each year. The company has leaned on equity and banking relationships to keep funding flowing into its coffers. Brightview is unique in that the company takes a private-fund approach for new growth, with its most recent fundraise targeting more than $200 million.
The company currently has four communities under construction in Virginia, New Jersey and New York, with another 10 in its pipeline currently under site control. The company manages48 communities across eight states in the U.S. Mid-Atlantic region.
Even if development goes “gangbusters” in the years ahead the company plans to continue at its current pace in order to maintain a “high-quality startup process” for its new builds upon completion with dedicated support from the home office.
Looking ahead to the next six to 12 months, Marker said he believes there will be at least a “slight uptick” in new-builds.
“Groups will need to continue to find solutions to mitigate the uncertainty with tariff risk in construction. But if groups can successfully do that, the debt and equity is becoming more available. We’re currently out beginning our fundraise for our ninth private fund, and there’s been very strong response so far to that opportunity for investors on the equity side as well.”
