5 Growth Markets for Senior Assisted Living Properties

America’s senior population is growing rapidly, fueling a boom in construction of senior assisted living properties. The assisted living construction boom is anything but geographically uniform, however, and a handful of metropolitan markets account for a wildly disproportionate share of new construction of senior assisted living properties.

America’s senior population is growing rapidly, fueling a boom in construction of senior assisted living properties
America’s senior population is growing rapidly, fueling a boom in construction of senior assisted living properties

The population of seniors aged 65-74 is expected to grow1 faster than any other demographic segment in the country between 2015 and 2020, continuing an annual growth rate of over four percent.

Geographically speaking, the growing senior population is concentrated in the southern and western states. A mere seven states, Florida, Texas, Virginia, Maryland, North Carolina, South Carolina, and Tennessee are expected to account for 40 percent2 of the growth in the senior population.

Many of these seniors reside in, or move to, large cities. As a result, construction of new assisted living facilities is disproportionately concentrated in a handful of major metropolitan markets. Here are five of the most important.

#1  Boston, Massachusetts

Boston had 6753 new units of assisted living under construction in the third quarter of 2013. This is an important part of a broader trend in the state, one that saw Massachusetts labeled4 as one of the top 10 states for senior housing construction.

However, Boston may be experiencing the effects of a statewide bubble5 in housing prices, which have been rising faster than the costs to either build or rent a home. Whether the current boom in assisted living represents over-development remains to be seen.

#2  Chicago, Illinois

Chicago had 6766 new units of assisted living under construction in the third quarter of 2013. Between Chicago and other metropolitan centers, Illinois made the list7 of top 10 states for senior housing construction.

The State of Illinois has played a significant role in the current assisted living construction boom, by expanding the number of facilities that can receive Medicaid8 payments. Some of these facilities are new constructions, while others are being converted from other uses.

Senior Assisted Living Properties
Chicago had 676 new units of senior assisted living properties under construction in third quarter 2013

#3  Phoenix, Arizona

Phoenix had 858 new units9 of assisted living under construction in the third quarter of 2013. This is perhaps small wonder, given Phoenix’s status10 as one of the most rapidly growing metropolitan areas in the United States. Cost of living is relatively low, a significant draw for many new residents.

#4  Houston, Texas

Houston had 1,07111 new units of assisted living under construction in the third quarter of 2013. Indeed, Houston is at the forefront of a senior assisted living construction boom in Texas.

Texas’s business-friendly climate has encouraged general population growth, leading to rising rents and more construction.12 In many cases, non-senior adult transplants, notably from Michigan and California, are later followed by their senior parents.

Thanks to Houston and other major metropolitan markets, Texas was named13 one of the top 10 states for senior housing construction.

#5  Minneapolis, Minnesota

Minneapolis had 1,07214 new units of assisted living under construction in the third quarter of 2013, rocketing past15 Houston to take the top spot for that year.

Along with Saint Paul, Minnesota, Minneapolis is experiencing a boom in assisted living construction in response to a so-called “silver tsunami,” the 1.5 million baby boomers in the state who are either retired or close to it. Small wonder Minnesota was also named16 one of the top 10 states for senior housing construction.

As of 2013, over 6,00017 new senior housing units were planned for the Twin Cities. The sector offers a plethora of options, including nursing and memory care options for patients with Alzheimer’s and other dementia-like conditions.