By Melissa Brown, COO, Gravity Consulting
The question families are already asking
If you had $1 million, would you hand it to a senior living community for the right to move in? More families are answering no. They’re doing the math on a $400,000 house, a few services brought in, and an inheritance left intact, and asking why the entrance fee should win.
I hear some version of that question constantly, from adult children helping a parent decide and, more and more, from the parents themselves. The first baby boomers turned 80 this year, and that’s the milestone that matters for our industry. Sixty-five was never the demand signal. Seventy-five to 80 is when people actually need senior living, and the cohorts coming behind them are less willing to convert a lifetime of savings into a seat in a community. Their children are often the ones telling them not to.
I recently joined Jerry Vinci on From Leads to Leases to talk about how we’re answering that question on real projects. This is the longer version, with the numbers. The middle market isn’t a charity case or a downgrade. It’s the largest underserved segment in senior living, and reaching it is a design and underwriting problem we already know how to solve.
The communities being designed today will lock in their model for the next 20 years. A high-entrance-fee building can’t easily pivot five or ten years from now, so the time to plan for the middle is now.
Why the industry keeps building past the middle
The high-entrance-fee model persists for a simple reason: it works, and lenders know how to underwrite it. NIC MAP data shows CCRCs outpacing non-CCRCs on occupancy in every care segment, with CCRC independent living at 93.7% in the first quarter of 2026. Average entrance fees rose from about $400,000 in 2020 to more than $480,000 in 2025. Nobody walks away from numbers like that.
But those communities are full of the residents who can afford them, and that’s a narrower slice of the next wave than most pro formas assume. NORC at the University of Chicago projects 16 million middle-income seniors aged 75 and older by 2033. Without counting home equity, nearly three-quarters of them won’t have the resources to pay for private assisted living. Even with the house sold, close to 40% still can’t.
What I see in the field matches the research. As a group, boomers hold more wealth than any generation before them, but it isn’t evenly spread. Roughly the bottom half will reach retirement with $1 million or less, and many are counting on public help that won’t cover them. Medicaid generally enters the picture only after someone spends down to eligibility or needs a nursing-home level of care. Families tend to learn that at the worst possible moment.
The returns in this segment can match or beat the traditional model. The difference is that you have to prove it. A lender has seen a hundred entrance-fee pro formas. A manufactured-home community paired with licensed assisted living, or an office building converted into one, needs a team that can show the numbers hold up.
Rethinking what an entrance fee buys
One of the projects I’m most excited about is in New York, a certificate-of-need state where new assisted living is tightly controlled. The original developer had run successful manufactured-home communities elsewhere and planned independent living. The municipality required assisted living on the site as a condition of approval, so the project went through the certificate-of-need process and now offers both.
The structure is simple. A resident pays a $50,000 entrance fee, then buys their home directly from a manufactured-home builder the community has pre-selected, choosing from vetted layouts and finishes so quality stays consistent across the campus. When the home is ready for delivery, a second $50,000 covers installation and site development. From there, it’s a rental relationship: the resident owns the home, and the community owns the land. When a resident sells, the buyer is pre-approved by the community and pays the same fees.
Most residents spend $250,000 to $300,000 on the home itself, for 1,600 to 2,000 square feet, usually two bedrooms and a den. That’s the size boomers keep asking for, and it’s brand new.
The part I’d ask every operator to think about is what the entrance fee actually buys. It isn’t a discount on future care; residents pay for assisted living when they need it. The fee buys priority. The nearest competing assisted living runs a three- to six-month wait list, and most people who need assisted living can’t wait that long. They’re coming home from the hospital or recovering from a fall. A place at the front of the line, often a matter of days or weeks, is worth more to them than any discount.
Would it work without a wait list? I believe so. Even in a saturated market, very few communities offer full amenities and access to care for a $50,000 to $100,000 entry. You might adjust the fee to the market, but the gap is real.
One thing caught our attention early. Because the site is regulated as a manufactured-home park, it falls under rules a traditional senior living community wouldn’t, including limits on annual rent increases. None of it has been a barrier. It simply has to be in the pro forma from day one.
Adaptive reuse: the math is in the window line
Underused office buildings are some of the best opportunities for middle-market assisted living, and some of the easiest to misjudge.
The mistake I see most often is dividing the building’s square footage by a target unit size. On a four-story office building we’re converting in Virginia, that math said 85 units. The real number was 45, because every resident unit needs an exterior window. Capacity is set by the perimeter, not the floor plate.
Forty-five units still made the project work, and work well, at an estimated $4 million to $8 million to bring them online with a full amenity package. Amenities and a handful of units sit on the first floor, assisted living on the second and third, and memory care on the fourth. We put memory care on top deliberately: a courtyard cut down from the roof gives those residents secured outdoor space, which every one of our projects includes, and it creates more interior wall with windows for units. The owners liked the result enough that they’re looking at other buildings in their portfolio as tenants leave.
Office buildings adapt better than people expect. Many were built for cubicles, essentially one open floor around a core of restrooms and stairs. Once units are laid out along the windows, much of the existing infrastructure can stay.
The best conversions also turn a building’s quirks into selling points. This 1970s building had an awkward ground-level overhang with half-depth parking underneath. We’re turning it into private patios with level entry straight from the parking lot, and those units carry a premium. Another section becomes a large front porch, which gives a downtown building a residential face.
On another project, in a largely blue-collar market, the building’s employee cafeteria and commercial kitchen were already the right size for the 80 units we planned, with much of the equipment in place. Most of the work there is finishes rather than infrastructure. That’s how we can target under $4,000 a month plus level of care in a market where established communities charge $8,000 to $15,000. Those communities are full. The families who can’t pay those rates, or who couldn’t wait months for a unit, are the market nobody is serving.
That’s also why I don’t rule out distressed properties. If a building needs work anyway to feel residential rather than institutional, buying it at a distressed price and redesigning it once can cost less than starting with one in good repair. Each property needs its own evaluation, but we’ve found distressed buildings that pencil out well.
Historic buildings and the capital stack
A building that looks like a liability on a site visit can be an asset in the capital stack. One of our current projects is a 1916 schoolhouse that would likely be lost if no one saved it. Because we’re preserving its historic character, the project qualified for millions of dollars in federal and state historic tax credits.
The federal Historic Tax Credit equals 20% of qualified rehabilitation costs for income-producing buildings rehabilitated to preservation standards, and most states offer a credit of their own that can be layered on top. Preservation does add cost to some finishes. Here, the credits far outweigh it.
It shapes the design, too. The building has original tile on its walls that has to stay. Rather than fight it, we’re drawing the eye elsewhere, with doors and trim in a deep peacock green and gold hardware. I can’t name another assisted living doing that, which is the point.
The credits come with process: eligibility, National Park Service review and the timing of the credit all need planning early, with a tax advisor at the table. For an owner holding an older property, or an investor looking at one, it’s real capital that most senior living pro formas never consider.
Affordable is not the same as lesser
This is where middle-market projects go wrong, so I want to be precise. Lowering what it costs to build is how we reach a lower price point. It isn’t permission to deliver less. The dollars we save on infrastructure should show up in the experience.
That starts with who actually makes the decision. Boomers want to choose for themselves, but rarely without their children’s input, and the most influential voice is usually a daughter in her 40s, 50s or 60s. So we design for her. Our interiors lean younger and a little more feminine: bright colors and the furniture and finishes she’d pick for her own home. When she walks in, it shouldn’t look like what she expected assisted living to look like.
We also bring independent-living amenities into assisted living. Every one of our communities gets an indoor pickleball court, including at the assisted living level. Not every resident will play. Some will, and others will watch their children and grandchildren play, or bring a friend. A real fitness center, not a rack of dumbbells in the corner, does the same work. These spaces bring families into the building more often, and they’re what a prospective family sees on a tour.
Food has turned out to be the most powerful piece. We cook from scratch wherever we can: whole proteins, real vegetables, and bread made from flour, water and salt, not frozen dough reheated to smell fresh. Between meals, snacks lean on protein: Greek yogurt, cottage cheese, fresh fruit, vegetables with dip, rather than the same graham crackers every afternoon for five years. That matters clinically. Food people actually want to eat is one of our most direct levers against malnutrition risk, and the growing evidence linking metabolic health to cognitive decline is a big reason we take this so seriously. It’s too early to claim outcomes, but I’m confident in the direction.
When I describe the food program to an adult child in the middle of choosing a community for a parent, the reaction is almost always the same: “I want to live there.” That’s the moment the guilt starts to lift. Nearly every adult child carries some version of “should I be doing this myself?” A place they’d choose for themselves answers that better than any brochure.
Activities need the same rethink. I once heard about someone walking through a nursing home that had been closed for 30 years. The activity calendar was still on the wall, and it matched what many communities run today. Today’s 85-year-old is more like the 75-year-old of 15 years ago. When residents tell us they skip activities because “that’s where the old people are,” that’s feedback on our programming, not on them.
An ecosystem, not just a building
Real estate is only part of the model. The communities that win the middle market will wrap a branded set of services around the resident: home care, home health, outpatient therapy and adult day programs. Some premier communities already do this. The opportunity is doing it at a middle-market price.
Those services keep independent-living residents independent longer, which frees assisted living units for people who need them now, including people coming from off campus. They also reach people who don’t live with you yet. A family using your adult day program today already knows your care and your staff. When the time comes for senior living, yours is the first name they think of.
In some of our assisted living buildings, we’re adding a med spa on the ground floor, open to the public. A resident who has used those services for years doesn’t have to give them up. Adult children can book a service during a visit. And neighbors who have never toured a senior living community have a reason to walk through the door.
The goal is to make a smaller piece of land do more work, with services that feed the community from both directions.
Where these projects go wrong
The most expensive mistake is running down the runway without someone who has built and operated senior living. We were brought into one project after the investor had already spent $25 million developing the land, and it was still far from ready. By then, financing is harder. Lenders expect an experienced owner-operator on the team before they take a senior living pro forma seriously.
The 85-versus-45 unit count is the same problem on a smaller scale. And a compliant layout can still be the wrong layout. There are many ways to fit 40-some units into a building, and the one you choose determines your premium units, your staffing patterns and how the building feels on a tour.
Before real money goes in, an owner should be able to answer some hard questions. What does licensing look like in this state, and is there a certificate-of-need process? How many compliant units will the building actually support? What will residents pay, and what will they get for it? Which unusual regulations come with this property type? Who on the team has operated a community like this before? If those answers aren’t solid, the next dollar should go toward getting them, not toward construction.
How Gravity helps
Gravity works with owners, investors and developers from the first look at a property through opening day and beyond. Before construction, that means feasibility, the licensing or certificate-of-need pathway, unit layout and design direction, and a pro forma built to stand up in front of a lender. Once a community is open, we bring the operating side: leadership, dining and activity programming, compliance, and the home health and therapy services that make the ecosystem model work.
If you’re holding land, an office building, a historic property or a community that isn’t reaching the families around it, let’s look at what it could become.
Frequently asked questions
Often, yes. Office floors built for cubicles adapt well, and much of the existing infrastructure can usually stay. Feasibility depends on state licensing, zoning, building code and the building’s perimeter, since every resident unit needs an exterior window. Each building needs its own evaluation.
Fewer than the square footage suggests. Capacity follows the perimeter because every unit needs a window. On one four-story conversion, a square-footage estimate pointed to 85 units; a compliant layout supported 45, and the project still penciled out.
Communities designed for older adults who earn too much to qualify for public assistance but can’t afford high-end private-pay rates or large entrance fees. NORC projects 16 million middle-income seniors aged 75 and older by 2033.
In one model, the resident pays an entrance fee, buys a home from a builder the community has pre-selected, pays a second fee for installation, then rents the land. The community owns the land and provides the amenities. The entrance fee buys priority access to on-site assisted living, which is paid for separately when needed.
Potentially. An income-producing building rehabilitated to federal preservation standards may qualify for the 20% federal Historic Tax Credit, and most states offer their own credit as well. Involve a tax advisor and your State Historic Preservation Office early.
In practice, yes. Lenders typically expect an experienced owner-operator on the team before they’ll seriously consider a senior living pro forma.
