As we approach a new year, senior living development is still a tough arena, with market conditions posing significant hurdles. Over the past two years, developers and senior living operators have found themselves navigating unprecedented challenges, from rising costs to cautious lenders. Yet, as we gear up for the upcoming reBUILD conference in Chicago, industry leaders remain optimistic about the possibilities ahead.
At the recent BUILD conference in Orlando, much of the industry’s conversation centered around these challenges. A year later, as we prepare for reBUILD, there is still hesitation across the sector about ground-up development. However, leaders like IntegraCare’s CEO, Larry Rouvelas, and Charter Senior Living’s CEO, Keven Bennema, are finding ways to push forward.
Finding Success with Creativity and Strong Partnerships
The companies that succeed in senior living development in 2025 will be those that can adapt to the times with creative and entrepreneurial strategies. In recent years, many operators have leaned heavily on established capital relationships, focusing on portfolio reinvestments instead of new builds.
Charter Senior Living exemplifies this approach, maintaining an active pipeline of projects in secondary markets. In 2024, the company launched a new 80-unit assisted living and memory care facility near Nashville, Tennessee, in partnership with DMK Development Group. This partnership has allowed Charter to build efficiently while keeping costs manageable—a key advantage in the current economic climate. Their success lies in selecting land and adopting designs that ensure cost-effective builds while maintaining quality, with sites often spread across six acres and structured as single-level communities.
Market Conditions and Opportunities
Bennema sees potential in focusing on secondary markets, as traditional high-barrier areas can come with prohibitive costs. Charter has launched six new projects this year, with another six anticipated for 2025. The company’s lean development model enables it to open properties with strong occupancy rates—sometimes achieving a 55% reservation rate by opening day. Bennema believes that those who start projects now, despite the challenges, will likely find themselves in a favorable position when market fundamentals eventually improve.
Rouvelas also expects growth in development starts next year, though he foresees challenges from both construction costs and lending conditions. IntegraCare has pivoted toward updating existing facilities, investing in memory care conversions to adapt to the “still challenging market” rather than embarking on new builds. Like Charter, IntegraCare has recognized that development opportunities may be more promising in tertiary markets with lower entry barriers.
Adapting to Market Realities
With high construction costs and a cautious lending environment, many banks are currently pulling back from commercial real estate investments. This “withdrawing tide” can impact senior living projects, even though their risk profiles differ significantly from other commercial sectors. Rouvelas predicts that regional banks may become more active partners, with fewer restrictions on commercial real estate loans.
While financing remains an obstacle, the potential rewards are still worth the effort for companies that adopt efficient and streamlined development approaches. Charter and IntegraCare have both found success in developing in markets with lower barriers to entry, with location choices based on demographic insights and anticipated growth.
Outlook for 2025: Cautious Optimism
Despite the hurdles, both Rouvelas and Bennema remain cautiously optimistic about the future. Bennema anticipates a gradual increase in development activity in 2025, with many operators likely to proceed despite less-than-ideal conditions. By the second or third quarter of 2025, Bennema expects more industry players to “take the leap” into new developments, with early starters potentially reaping significant rewards.
For those with projects underway, managing lease-ups and maintaining debt obligations may present challenges. Banks that supported these projects may be hesitant to extend new loans until they see performance improvements in existing developments. This could lead to a short-term focus on distressed assets, allowing operators to regroup before re-entering the market for new development financing.
Preparing for Long-Term Success
Operators who begin projects now with efficiency in mind may attract the attention of larger banks looking to partner with companies demonstrating performance and stability. Bennema and Rouvelas agree that while 2025 may present unique challenges, it also offers substantial growth opportunities for senior living operators prepared to innovate.
Looking ahead, Rouvelas and Bennema see 2025 as a potentially strong year, possibly even surpassing 2024. For the senior living industry, this forward-looking mindset—coupled with efficient development models and strategic partnerships—could pave the way for lasting success in a challenging market.
Krone Weidler, Founder & Principal
Cadre Healthcare Realty Advisors
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Summerfield, FL 34491
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