An analysis by NIC MAP of senior housing properties that opened from 2022 through 2024 found that 70% debuted with rents above the prevailing market average for their location.

While it’s typical for most new properties to open above market rent, the surprising part is that they’re opening so far above market rent, according to NIC.

In primary markets (the top 31 metros across the US), new developments are opening at rents 19% above the market. New independent living and assisted living properties entered primary markets at a 20% premium over market rents.

Secondary markets (markets 32 through 99 nationwide) have experienced a more modest 11% gap. Assisted living properties show a slightly higher premium than independent living, at 12% versus 10%.

Overall, the average rent delta increased to about 30% for both majority independent living and assisted living, according to the analysis.

The industry is in this situation because development costs have increased significantly due to rising labor and material expenses, higher interest rates, and tighter capital markets, the report says. In many cases, the financing required for new projects has become too expensive, forcing developers to target a high-end consumer who can pay the necessary rents to justify construction. At the same time, middle-market projects have become harder to execute, resulting in fewer new developments aimed at this demographic.

"While high-rent developments continue to push forward, the broader industry must grapple with the question of how to serve a growing aging population without pricing out a significant portion of potential residents," according to the NIC blog on the report. "Whether through innovation, policy shifts, or economic changes, the future of senior housing will depend on the industry’s ability to bridge this gap."

To read the full blog, click here