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Seniors Housing Development Costs Rise Nearly 18% in Two Years
Seniors housing development costs have risen sharply over the past two years, driven mainly by labor and land expenditure, CBRE reported. The average cost of a seniors housing development has increased by 17.8% since 2020 to $317,400 per unit or $333 per square foot.
Meanwhile, average returns for new product fell to 8.6% in the first half of 2022 compared with 9.6% in H1 2020. CBRE attributed the decrease to significantly higher input costs combined with a slightly slower market rent growth.
“Due to a slow post-COVID recovery in occupancy, market rents have been below the level needed to support new development in many markets; a more balanced market could be on the horizon as many high-end communities are fully occupied and poised for rent increases,” said Daniel Lincoln, national practice leader of Seniors Housing & Healthcare for CBRE’s Valuation & Advisory Services.
- ◦Development
