After years of attending the NIC and ASHA conferences, I feel a need to shout out about the construction costs that one of our competitors supply to them for senior living. Frankly, I don’t know how anyone could make the numbers work for a project with the costs that they promote. First of all, construction costs per square foot are probably the wrong numbers to be considering when developing proformas. Cost per unit or cost per bed is what matters because revenue is based on cost per unit and cost per bed. Cost per square foot can be an extreme variable depending on space usage. As you can imagine, as an individual room increases in size, the cost per added square foot isn’t much. So larger units cost less than smaller units on a cost per square foot basis, but the incremental cost per unit is not that much different. We have been working hard to reduce cost per unit and cost per bed to be attractive to the mid-market, and have a second mid-market prototype that allows us to build very nice facilities in the $77,000 per bed, as low as I’ve heard.
But I digress. We see construction cost for construction, in general, 20%-30% less than what NIC and ASHA are proposing. So if you are considering a senior housing project, please call us to get the right numbers that will make your proforma work.
Pete Douglas, President
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