Seniors Housing Development Costs & Returns Rise in 2019
Seniors housing development costs rose by 6.4% in 2019, while the average return rose to 9.5%. Increased labor costs, coupled with land costs and, to a lesser extent, materials costs, all contributed to the rise.
Seniors housing development costs likely will rise modestly in 2020, even in a continued climate of somewhat reduced development activity.
Total costs for a seniors housing development rose by 6.4% in 2019 to an average of $317 per sq. ft.
Source: CBRE Valuation & Advisory Services and CBRE Research, Q4 2019.
Hard costs represented 66.8% of total development costs, followed by soft costs at 19.5% and site costs at 10.1%.
Source: CBRE Valuation & Advisory Services and CBRE Research, Q4 2019.
Average returns (stabilized net operating income as a percentage of overall development costs) rose to 9.5%, up 60 basis points in 2019.
Source: CBRE Valuation & Advisory Services and CBRE Research, Q4 2019.
Development cost metrics are vitally important for parties involved in the development process. Explore further analysis of development pricing in CBRE’s annual report.
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