Canadian seniors housing construction is not keeping up with demand, says a Cushman & Wakefield report.

Demand is expected to accelerate as Canada’s over-80 population increases 4.8% annually between 2025 and 2042, and 200,000 new seniors housing suites will be required over the next decade to maintain market equilibrium. But in the past decade, fewer than 73,000 suites were built, according to the report.

“Projected demand growth is expected to overwhelm the existing inventory of rentals in the next few years, worsening the housing shortage felt in other parts of the market and creating a significant need for new seniors housing developments,” said Heather Payne, senior vice-president for C&W’s seniors housing and healthcare valuation and advisory services (VAS) group.

“The current rate of construction starts is not keeping pace with the rate of required replacement.”

During the past year, private-pay seniors housing occupancy increased 4% to 88%, a C&W survey of 17 markets found. Meanwhile, positive absorption has increased in 16 of the 17 markets since 2021.

Private-pay occupancy is expected to surpass the pre-pandemic level of 92% by year-end 2025 after increasing by more than 8%, with leasing velocity accelerated in most markets, since 2021.

“Despite the well-telegraphed increase in demand, seniors housing development activity in Canada has slowed to a new cyclical low, as rising construction costs and interest rates have crowded out investment,” said Sean McCrorie, head of C&W’s seniors housing and healthcare VAS group.