SENIOR-LIVING INDUSTRY CHALLENGES: TOP 10 ISSUES FACING OPERATORS IN 2025-2026

As demand and occupancy reach new heights, senior living leadership is facing difficult choices.

At the end of Q3 2025, NIC MAP data showed average senior living occupancy up 70 basis points Q/Q to 88.7% across the top 31 markets. This was the seventeenth-consecutive quarter with positive growth.

The National Investment Center for Seniors Housing & Care (NIC) explained the trend as baby boomers requiring senior living facilities in record numbers, a trend that is expected to continue into 2026 and beyond.

So, why is the senior living industry delivering record-low levels of new inventory? Without new units, existing teams and facilities will be pushed to their breaking points. And, with rapidly changing resident care and experience expectations, the next twelve months will be a balancing act with difficult decisions for operator executives and functional leadership.

CHALLENGE 1 – SECURING DEVELOPMENT CAPITAL
In a time when development capital is highly coveted, the terms – if an operator can even qualify for debt or equity funding – can be costly. In many cases, prohibitively so.

A recent Senior Housing News article stated, “…the financial math needed to make senior living development work is not currently as compelling as the math driving acquisitions of newer, type A properties for prices lower than replacement costs. Capital providers are also limiting their equity and debt to ‘well-established, very strong developers and operators’ as uncertainty about the future remains.”

The article also quoted Lisa McCracken, head of research and analytics at NIC, saying, “For many, the terms for this construction capital still do not pencil out in terms of debt available and the equity commitment needed.”

CHALLENGE 2 – WORKFORCE RECRUITING & RETENTION
Recruiting and retaining qualified, skilled care workers for senior living operators has become a serious problem. More than half of all senior living personnel can be classified as care aides, nurse’s assistants, LPN/LVN or RNs. This means operators are competing against a wide range of entities for qualified workers.

According to NIC, “Workforce demand is rising faster than population growth. While the U.S. population is projected to grow just 4% by 2033, the 75+ population and senior care resident base are expected to grow nearly 50%. By 2033, the U.S. will need 660,000 more workers in just four core roles – care aides, RNs, LPNs/LVNs, and nursing assistants – to meet projected senior housing and skilled nursing demand.”

This also puts pressure on operators to retain existing talent potentially straining the relationship between managers and individual role players.

CHALLENGE 3 – EVOLVING RESIDENT & CONSUMER PREFERENCES
As the mix of community members changes with the influx of the baby boomer generation so too does the set of preferences and expectations. The legacy utilitarian look and feel will not cut it. Residents demand a certain level of experience. This is not just when it comes to care, but also for everyday engagements such as dining and community activities.

Even more so, residents – and their loved ones – expect a certain level of technological integration and capability.

PointClickCare released a 2025 survey that stated, “As the senior living industry adapts to new care models, shifting resident demographics and increased demand, resident satisfaction is becoming a key performance driver, not just a soft metric. In turn, providers are investing in technology that provides a comprehensive resident health record and improves staffing, which ties directly into outcomes, retention and even value-based care initiatives.”

CHALLENGE 4 – UPGRADING OBSOLETE FACILITIES & OPERATIONS
According to NIC data, the average age of all senior housing properties is 24 years, with 60% being at least 17 years old. 45% are 25 years old or older. To put that in context, that means 45% of facilities were built before smartphones, social media and cloud computing. Music was consumed on CDs.

HealthTrust Chief Operating Officer Colleen Blumenthal described the older facilities as sites with, “Lower, 8-foot ceilings, communal bathrooms and an abundance of studio apartments are often a barrier to an outdated senior living property’s ability to recover in its given market.”

An article from SHN furthered the discussion. “The challenge for smaller communities with a large portion of studio apartments lies in their ability to collect revenue. For example, a community with 80 studios and 40, one-bedroom apartments might struggle to attract a qualified executive director or staff even at full census.”

Blumenthal cited the Enlivant case study as a warning. “You’re barely going to be able to pay for the staff you need to run the building. So I think that that gets to be a challenge and that’s why, for some of these, it just doesn’t work anymore. I really think the biggest barrier is building design more than anything.”

CHALLENGE 5 – CHANGING COMPLIANCE & REGULATIONS
The senior living industry has seen multiple changes to the regulatory and compliance landscape over the past 12 months alone. The Federal Minimum Staffing Standards were introduced in April 2024 and represent the most significant change. This requires nursing homes to provide a minimum of 3.48 hours of nursing care per resident day, including 0.55 hours of care from a registered nurse per resident day and at least 2.45 hours of care from a nurse aide per resident day, as well as 24/7 RN coverage Senior living begins 2025 with expectations of regulatory relief but also the need to educate policymakers, consumers – McKnight’s Senior Living. Non-rural facilities must comply by May 10, 2027. Rural facilities by May 10, 2028.

State-Level regulations and compliance: Pennsylvania updated its assisted living regulations in 2024, increasing minimum direct care hours to 3.2 hours per resident per day, up from the previous 2.87 hours. Texas introduced required dementia training for all staff, immediate suspension of employees on the abuse registry (HB 1009), and disaster registry enrollment required by April 1, 2025. Minnesota adds new quality ratings based on MDH surveys to its Minnesota Assisted Living Report Card with Resident Health, Safety, and Staffing ratings updated quarterly based on survey data.

2024 saw the Older Americans Act (OAA) reauthorization, with all updated regulations requiring compliance by October 2025, focusing on healthy aging, economic security, and senior centers. Infection control protocols and emergency preparedness requirements are now commonplace in the U.S. as 20 states enacted regulation changes and updates.

CHALLENGE 6 – INVESTING IN TECHNOLOGY & INNOVATION
Investments in technology mesh with numerous other challenges on this list. Resident experience and satisfaction, compliance, employee retention and recruitment, facility obsolescence – these are all challenges that can be positively or negatively affected by the technology environment within a given senior living workplace.

However, budgets are budgets, and as stated earlier CAPEX is difficult to come by. As such, tech innovation may have to be funded from OPEX, which makes prioritization difficult. Still, as stated above, 61% of survey responses cited tech budget increases of 25% or more YoY. Top benefits of the investment are projected as increased resident satisfaction, revenue generation, reduced operating costs and staff satisfaction.

Barriers to new tech implementation are overall budget constraints, integration with existing systems, training and adoption, and limited access to comprehensive data sets for data-driven decisions.

CHALLENGE 7 – OPERATING MARGIN PRESSURE
So, payroll is increasing to retain and recruit skilled labor. Inflation and tariffs are making materials more expensive which is passed on as more costly upgrades, services and maintenance. Insurance is more expensive. Technology budgets are up.

Summary: OPEX is on the rise.

How does the C-suite manage operating margins to expectations? Pressure from investors and the board is real. And, with resident satisfaction a key factor in net revenue retention as well as a metric in the acquisition of hard-to-secure capital, straight pass-through of costs onto the community member is not an ideal solution.

Executives are looking for ways to lower OPEX with innovation creating enough of a cushion to make any increase in cost for the resident as painless as possible.

CHALLENGE 8 – SUCCESSION PLANNING & LEADERSHIP CHANGE
A large percentage of senior living C-suite leadership is nearing retirement creating a significant risk and opportunity for advancement depending on the bench strength of a given operator. With any top-level leadership change comes the potential for institutional knowledge loss and organizational inefficiencies.

From another angle, leadership loss to retirement also opens the door for additional employee turnover at operators who lose talent leaving to fill these promotion-grade positions. Retaining your best and brightest can be extremely challenging when faced with more compensation and the elevated title/responsibility.

This risk is being responded to with increased leadership development and mentoring programs designed to elevate top talent and prepare them for next-generation executive roles.

CHALLENGE 9 – SLOW SUPPLY CHAINS
Lead times in the US market continue to experience delays of 2 to 3 times the pre-pandemic timetables. This means a new construction, redevelopment or upgrade project planned for 18-month completion now takes 24-36 months.

Renovations must be phased to keep facilities operational. Each phase depends on previous phase completion. Material delays in Phase 1 cascade through all subsequent phases meaning a 12-month project becomes 24-30 months. Total revenue impact: Losing $50K-150K per month in offline units.

Operational impacts can be life threatening should emergency generators, HVAC or other critical infrastructure fail. Even so, senior living operators may defer maintenance with ordering delays. The “duct tape and prayer” temporary fix is not an ideal scenario. On the flip side ordering for the future to get in front of the supply chain can lead to costly, unnecessary overhead killing budgets for other areas of the business.

Experienced, connected procurement teams are extremely valuable in 2025/2026, which also means they are ripe for poaching. Well-funded operators can cause competitive disruption with a bulk infrastructure order or lucrative employment offer a smaller player cannot match.

CHALLENGE 10 – THE BABY-BOOMER EFFECT
Roughly 11,000 Baby Boomers are reaching retirement age every single day. The older ranges of the generation have reached the time in their lives where a senior living community is desirable or necessary. As such, a record number of new-unit leasing occurred from Q2 to Q3 2025.

This will accelerate in the years to come.

Beyond the strain that rapid, mass new-resident onboarding has on operations and staff, the baby boomer is known for having more discerning taste and intensive requirements such as resort-style amenities, smart home technology, wellness centers with professional equipment, upscale dining venues, and spa and salon services. Obsolete facilities and legacy studio units cannot address this demand which leaves few options and dissatisfied community members.

This can be a daunting tidal wave to face for the C-Suite, management and role players alike. Your numbers are tanked before you even begin.