Costly materials and high interest rates are impacting senior living construction projects nationwide, according to a recent analysis from consulting company Plante Moran.

For example, the company reported that since January 2020, costs for concrete, lumber and steel have surged by 39.22%, 18.74% and 56.91%, respectively.

“Proactive planning and value engineering are key factors when trying to make the best decisions for a successful, on-budget project. Owners should work with a development advisor to right-size their projects, understand the right amount of escalation contingency based on local market risk factors, and coordinate with suppliers early to lock in pricing, labor, or other resources when possible,” Plante Moran said.

The analysis examined market data from NIC MAP Vision Data Service, focusing on the country’s East North Central, Mid-Atlantic, Northeast and Southeast regions.

Plante Moran’s East North Central Region (i.e., the Midwest), encompasses markets across Illinois, Indiana, Michigan, Ohio and Wisconsin. Supply and demand are pretty much equal here, according to the research. 

The region’s independent living occupancy continues to increase from its low point of 82.0% in the first quarter of 2022. Assisted living occupancy also continues to increase from its low point of 75.2% in the second quarter of 2021.

“As of this quarter, the IL occupancy is below the national average, while AL occupancy sits just above the national average,” according to Plante Moran.

The East North Central Region added 188 independent living units and 148 assisted living units in the second quarter of the year. Currently, there are 1,790 independent living and 1,800 assisted living units under construction in the Midwest.

Plante Moran’s Mid-Atlantic Region includes Kentucky, Maryland, North Carolina, South Carolina, Virginia and Washington, D.C. The region’s independent living occupancy sits above the national average; assisted living occupancy has increased to sit just below the national average. Occupied units are at an all-time high, the company said.

Currently, there are 1,790 independent living and 1,800 assisted living units under construction in the Mid-Atlantic.

The Northeast Region includes Connecticut, Massachusetts, Maine, New Jersey, Pennsylvania, and Rhode Island. Occupancy here has been steadily increasing in the post pandemic years. Independent living occupancy is currently above national averages, while the assisted living occupancy is just below.

Both independent living and assisted living have the highest number of occupied units since NIC MAP Vision Data Service began tracking this data, according to Plante Moran.

Currently, there are 1,621 independent living and 1,560 assisted living units under construction in the Northeast.

Lastly, the Southeast Region includes Alabama, Florida, Georgia, Mississippi, and Tennessee. Independent living lost inventory during the second quarter, according to the analysis, “while assisted living had another strong quarter.” 

Currently, there are 2,845 independent living and 3,032 assisted living units under construction in the Southeast.