What Does It Cost to Build an Assisted Living Community?
By Haven Senior Living Partners · · 2 min read
The main cost categories, timeline and risks of developing a new assisted living or memory care community.
Key takeaways
- Development cost covers land, construction, furniture and equipment, soft costs, financing and the lease-up period.
- Costs vary widely by region, size, design and care mix, so per-unit figures are only a starting point.
- Lease-up, the time it takes to fill a new community, is a major and often underestimated cost.
- Today's higher construction and financing costs are one reason new supply has slowed.
The main cost categories
Varies most by location. Zoning for senior housing can add time and cost.
Construction of the building and site work. Memory care adds secure courtyards and specialized design.
Commercial kitchens, common-area furniture, nurse call systems and safety technology.
Architecture, engineering, permits, licensing, legal, insurance and development fees.
Interest during construction and loan fees.
Funding for operating losses until the community fills, often 18 to 36 months for a new building depending on the market.
Typical timeline
| Phase | What happens |
|---|---|
| Feasibility | Market study, site selection and early design |
| Entitlement | Zoning, permits and state licensing approvals |
| Construction | Often 18 to 24 months for a mid-size community |
| Pre-leasing | Marketing begins before opening |
| Lease-up | Filling units toward stabilized occupancy |
Why build costs matter for investors
When construction is expensive and loans cost more, fewer new communities get built. Limited new supply supports occupancy at existing properties, which is one reason investors have favored acquiring and improving existing communities. The trade-off is that development deals carry more risk — cost overruns, delays and slow lease-up — and should offer more potential return to compensate.
Questions to ask a developer
- What is the all-in cost per unit, including lease-up?
- Is the construction contract a guaranteed maximum price?
- How much contingency is budgeted?
- What lease-up pace is assumed, and how does it compare with nearby openings?
- What happens if the community fills more slowly?
Read more in Supply vs. Demand Imbalance in Senior Living Development, or schedule a call.
This article is for education only and is not an offer to sell or a solicitation to buy any security. Target returns are not guaranteed. Consult your own tax, legal and financial advisors.
