Labor shortage raising costs of CCRC construction

A skilled labor shortage in the construction industry is forcing some contractors to be increasingly selective in the senior housing projects they take on, driving up construction costs in the process.

The price for construction services increased nearly 10% over 2015, according to a report on continuing care retirement community and senior housing construction cost data released Wednesday. The report was created by the American Senior Housing Association and national construction firm The Weitz Company.

That price increase is due in part to a worker shortage in the construction industry, which saw a drop from 7.5 million workers in 2007 to 5.5 million at the start of 2015. The shortage is causing some construction contractors to “turn down work or be very selective about the projects they pursue,” according to the report.

High-level skilled nursing facilities, typically made with steel or concrete construction, high-end finishes and luxury amenities, saw the biggest jump in construction costs between 2015 and 2016. Constructions costs range from $234 to $302 per square foot, depending on geographic area, the report found. High-level costs ranged from $212 to $271 per square foot at the start of 2015.

Mid-level skilled nursing facilities, which target more moderate income residents with wood frame construction and standard amenities, have a current cost range of $184 to $218 per square foot, according to the report. Last year's Weitz report showed mid-level construction costs ranging from $175 to $211.

Construction costs are still predicted to increase over 2016, but at a more moderate rate of 3% to 5%, the report said.