Development Project Costs Rose to Average of $388K Between 2023 and 2026

New data from CBRE shows the cost of senior living construction projects rose during the ongoing development slowdown.

From the third quarter of 2023 to the second quarter of 2026, the average cost of senior housing development rose to $388,830 per revenue unit or $364 per square foot, according to the survey, according to CBRE’s most recent development costs report.

The amount of building’s available rentable area has declined to 55.5% of gross building area over the past three years, down from 59.1% in 2023. The cost of furniture, fixtures and equipment (FF&E) surged over the past three years to an average of $11,900 per unit, totaling 3.2% of development costs.

Hard costs such as sitework, foundation work, building shell construction, roofing, finishes, landscaping, signage and labor make up 72.5% of a building’s total development cost. Soft costs such as inspection fees, construction loan expenses, architecture, design, project management and any other carrying costs during construction and leasing make up 16.2% of total costs. Site acquisition costs made the remaining 8.1% of the total cost, ranging from $16,000 to $36,600 per unit, according to the survey.

CBRE also surveyed developers on the returns on costs, noting cap rates rose to 7% in 2026 from 6% in 2023, resulting in returns dropping to 8.1% from 8.2%.

Andrew Christman is a reporter for Senior Housing News as part of WTWH Media, an avid reader and writer. He enjoys new book finds from his local library, and playing tabletop games with friends.