Senior Living Industry Still Searching For ‘missing Piece’ Of Development Puzzle

Editor’s Note: Below is from a webinar with two senior living executives that will be speaking at the 2025 BUILD-BRAIN conference in Dallas, Texas. Hear more insights like these during our two-day event. Tickets are available here.

As development remains at a relative standstill in 2025, some senior living companies are pushing their growth plans out to 2027. The clock is ticking as they seek to expand.

The industry has reached historic lows for new construction with only 809 units opened in the second quarter of the year, representing the lowest level of construction the National Investment Center for Seniors Housing and Care (NIC) has recorded in the two decades it has tracked the data. At the same time, the baby boomer generation is creeping ever closer. In 2026, the first of the demographic is turning 80.

That demand from a new generation, coupled with the shortfall of development, is causing a widening “supply gap” to the tune of $275 billion by 2030 at today’s development rates, according to NIC. Simply put, if the industry cannot grow now, operators might have to leave dollars on the table down the road.

Although construction costs have stabilized and lenders are more willing to provide debt, “the hard thing right now is equity,” said Laurie Schultz, partner of Avenue Development.

“Finding new entrants in the capital markets that want to be in senior housing seems to be the piece of the puzzle that’s missing right now,” she added during a Sept. 17 Senior Housing News webinar.

In addition to a lack of equity funding new developments, interest rates and a still-elevated cost of construction are also holding back certain plans and making the math required to pencil out harder.

For Avenue and companies like Aspenwood Co. – the management arm of Bridgewood Property Group – growth is crucial to future success. If the senior living industry does not find new ways to grow for the coming generation, Schultz believes other industries will. After all, senior living residents are also target customers of companies like home health operators and tech-enabled service providers such as Uber Eats.

“They’re all helping people age at home in place longer, and that’s really our competition,” Schultz said. “It’s all the technology and different groups that are not in our industry are finding ways to help people age in their home longer, and we have to combat that.”

Changing the playbook for equity

Senior living companies in 2025 are still struggling to attract equity partners to develop new communities.

Currently, the financial math of senior living favors acquisitions over development given that the cost of building a new community often greatly exceeds buying one at today’s sale prices.

“I don’t know that anyone thought we would come out of the Covid years and still have this prolonged of a challenge that we’re having specifically on development,” Schultz said.

Existing equity players are “waiting for the acquisition opportunities to work their way through the system” before they look back to development, she added.

“Why would you take the risk in new development on a product when you have all this acquisition opportunity of a product that’s five years or newer?” Schultz said.

Schultz also sees new equity entrants eyeing senior living with growing interest. But they are in no hurry to develop anew, and are still waiting to make sense of the industry and its complicated operational dynamics.

“Finding new entrants in the capital markets that want to be in senior housing seems to be the piece of the puzzle that’s missing right now,” she said. “They’re saying, why is my investment in senior housing going to be more financially sound than my investment in multifamily or data centers?”

Bottom line, Schultz believes that the senior living industry must “have a better story to tell” in order to attract new equity entrants.

Fitting into the theme of telling a better story, Aspenwood President Heather Tussing believes that a good way to help attract new partners is to show rather than tell of success by demonstrating it through data.

“Anybody can say anything, anybody can write anything, it’s having the financials to back it up and to show that you’re doing what you’re saying you’re going to do,” Tussing said during the webinar. “While we do work to change the playbook and work to expand the view, we also have to understand that this is what they’re accustomed to, and sometimes you have to color within the guidelines.”

And sharing with larger partners can be a two-way street that helps operators benchmark their own success relative to peers.

“You’re able to understand how somebody else did something that seems impossible or that seems very difficult,” she said. “We’re getting additional information, as well, which is helping us level up and become even better.”

Equity partners are also well-aware that ”the generation entering our communities is changing, and they have different expectations,” Schultz said.

That is partly why operators like Aspenwood and Avenue seek to infuse communities with new ideas that appeal to a new incoming group of older adults.

For example, Avenue’s Viva Bene active adult brand managed by Greystar Living melds middle-market rates with access to preventive health services from Sevi Health. The idea is to help people to stay longer and “increase wellspan, not just lifespan,” Schultz said. Avenue is ramping up further partnerships later in the year beyond preventative care, she added.

Senior living operators often feel pressure to “be the best at everything,” from hospitality to health care, Schultz said. But “that is a lot to be perfect in – and we’re not.”

Instead of generalizing, Schultz and Avenue focus on “those things that we can do to make it different, to reduce operational expenses and to attract the baby boomer consumer, which has different expectations.”

Getting projects across the finish line

Despite the challenges and constraints of getting development projects across the finish line, both Avenue and Aspenwood have managed to develop and open new communities this year.

Avenue earlier this year opened Viva Bene in St. Louis, and today the community’s occupancy is about 70%, Schultz said. And Aspenwood in June opened The Crestmoor at Green Hills in Nashville, Tennessee.

Both Avenue’s and Aspenwood’s leaders say they shed “blood sweat and tears” to open their respective communities.

Tussing credits the company’s onsite development team as helping to ferry the project from the starting line to the goalpost. Prior to opening, Tussing said “there would be prospective members lined up to hug the neck of one of our sales directors,” a testament to the community staff’s passion.

Avenue Development now has an in-house construction business, but when it started on Viva Bene, it did not. So, the developer screened several general contracting partners to find the right fit, alongside raising capital through friends, family and existing partners out of Indianapolis.

Tussing advises developers and operators to focus on getting the right location and right market before beginning construction.

“We spend so much time on the development side ensuring that the product we’re bringing fits the market that we’re going in, that there’s that need for it and that level of desire for the product we want to bring matches,” Tussing said.

In addition to the right location, the on site team becomes invaluable when a new community opens, as they can influence early adopters and help spread the word, strengthening opening numbers.

Looking to the future, Tussing still sees room for further innovation, particularly in the realm of technology offerings, in new developments by expanding life enrichment opportunities. One way Aspenwood is doing this is through a partnership with an extension of Juilliard to bring programming in for residents.

“There is so much that can be done outside of what is typical in senior living,” she said. “My goal is always for our residents or members to have a larger life with this than they had before they came to us.”

Tussing added: “Not every luxury product is going to work, but I think that if there’s enough of a market need, then I think it can definitely get across the finish line. There is a desire to do deals.”

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