From Condos to Care: How Senior Housing Can Rescue Distressed Condo Developers
February 21, 2025
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
By Allwyn Dsouza, Senior Analyst, Research and Insights, REIC/ICI
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Canada’s demographic shift is profoundly transforming the housing market, creating both opportunities and challenges for real estate development. As the senior population expands, demand for specialized housing options is surging, driving the rise of retirement hubs across the country.
A Growing Senior Demographic According to Statistics Canada, the number of seniors in Canada is increasing at an unprecedented rate[1]: |
- As of September 2024, approximately 7.6 million Canadians were aged 65 and older, representing 18.9% of the total population. By 2030, this share is expected to rise to approximately 23%.
- The 85+ age group has more than doubled since 2001, now making up 2.2% of the population.
- By 2046, the population of Canadians aged 85 and over could triple, reaching nearly 2.5 million people.
Figure 1.0
With limited government funding, the demand for senior housing is growing across the entire continuum of care, with a particularly acute need for care-intensive residences.
A comparative analysis of senior housing resources across Canadian provinces underscores the urgent need for significant private capital investment. This evaluation assesses provinces based on key factors, including affordability, policy innovation, support for aging in place, and program availability (with a 5★-rating indicating the best outcomes) [2345].
The findings highlight the necessity of tailored approaches that strike a balance between affordability, accessibility, and innovation while addressing regional disparities in Canada’s senior housing landscape.
A comparative analysis of senior housing resources across Canadian provinces underscores the urgent need for significant private capital investment. This evaluation assesses provinces based on key factors, including affordability, policy innovation, support for aging in place, and program availability (with a 5★-rating indicating the best outcomes) [2345].
The findings highlight the necessity of tailored approaches that strike a balance between affordability, accessibility, and innovation while addressing regional disparities in Canada’s senior housing landscape.
Table 1.0
Key Takeaways
Market opportunity
1. Rising Demand:
By 2040, the number of seniors aged 75 and over is projected to increase significantly in major urban areas. Given the current supply of 450,000 retirement and long-term care (LTC) units, an additional 450,000 units will be required to meet demand.
The Greater Toronto Area (GTA) faces the largest shortfall, with Altus Group estimating an average annual demand of 1,200 independent and assisted living units in the GTA .[6]
As more Canadians live beyond 85, the need for specialized housing and support services grows. Currently, over 25% of seniors aged 85+ live in collective dwellings such as nursing homes or seniors’ residences. With aging-related health limitations increasing with age, demand for care-intensive housing will continue to rise.
This demographic shift has already attracted real estate investors, developers, and institutional players looking to diversify their portfolios and capitalize on this emerging asset class.
- Quebec Leads Nationally: With its affordability, balanced supply-demand dynamics, and innovative policies like RPAs, Quebec is a model for senior housing programs across Canada.
- Alberta’s Strengths & Gaps: Alberta excels in affordability for low-income seniors but struggles with high vacancy rates and limited mid-tier care options.
- BC’s Aging-in-Place Focus: BC is a leader in empowering seniors to remain at home but faces challenges with affordability and rural service delivery.
- Ontario’s Urban Challenges: Ontario’s programs are heavily urban-focused but fail to meet demand due to long waitlists and affordability issues.
- Nova Scotia’s Rural Needs: Nova Scotia must address aging infrastructure and improve accessibility for rural seniors through expanded provincial initiatives.
Market opportunity
1. Rising Demand:
By 2040, the number of seniors aged 75 and over is projected to increase significantly in major urban areas. Given the current supply of 450,000 retirement and long-term care (LTC) units, an additional 450,000 units will be required to meet demand.
The Greater Toronto Area (GTA) faces the largest shortfall, with Altus Group estimating an average annual demand of 1,200 independent and assisted living units in the GTA .[6]
As more Canadians live beyond 85, the need for specialized housing and support services grows. Currently, over 25% of seniors aged 85+ live in collective dwellings such as nursing homes or seniors’ residences. With aging-related health limitations increasing with age, demand for care-intensive housing will continue to rise.
This demographic shift has already attracted real estate investors, developers, and institutional players looking to diversify their portfolios and capitalize on this emerging asset class.
Figure 2.0
Figure 3.0
* Retirement demand is estimated by applying the current national penetration rate of 8.46% (CMHC Seniors Housing Report Canada) to 75+ population as reported by Statistics Canada.
LTC demand is estimated based on 60 beds per 1,000 people aged 75 and over. This estimate represents the LTC Beds/Population ratios reported by Canadian Institute of Health Information.
LTC demand is estimated based on 60 beds per 1,000 people aged 75 and over. This estimate represents the LTC Beds/Population ratios reported by Canadian Institute of Health Information.
Figure 4.0
Source: Altus Group
2. Supply Constraints
Despite rising demand, new senior housing construction has slowed, with construction starts at their lowest levels in a decade. Economic factors, including rising material and labour costs, have constrained development, widening the gap between supply and demand.
This presents a strong opportunity for developers and investors to bridge the supply gap by expanding senior-specific housing across key markets.
Despite rising demand, new senior housing construction has slowed, with construction starts at their lowest levels in a decade. Economic factors, including rising material and labour costs, have constrained development, widening the gap between supply and demand.
This presents a strong opportunity for developers and investors to bridge the supply gap by expanding senior-specific housing across key markets.
Figure 5.0
3. Attractive Investment Returns
Senior housing has emerged as a high-performing investment class, often outpacing returns from traditional multifamily residential assets.
Senior housing has emerged as a high-performing investment class, often outpacing returns from traditional multifamily residential assets.
- The sector is transitioning from an alternative asset class to a mainstream investment opportunity, attracting private equity players from both Canada and the U.S.
- Leading senior housing operators have delivered an average CAGR of 32% over the past two years, significantly outperforming the TSX (~13.7%) and the TSX Capped Health Care Index (~15%).
Figure 6.0
Source: Yahoofinance.com
Figure 7.0
The shortage of senior housing and the ongoing condo market crisis present a unique opportunity for developers, investors, and policymakers to tackle two pressing challenges simultaneously:
As developers struggle to sell or lease high-rise condo units, repurposing underperforming or unsold condos into senior housing offers a cost-effective, high-impact solution. Converting existing condo units can be up to 60% cheaper per unit than new construction, making it a viable alternative to traditional senior housing development [8].
The adaptive reuse of existing buildings for senior housing is not without precedent:
Key Advantages of Condo Conversions
By leveraging the existing condo supply, senior housing operators and investors can play a pivotal role in addressing the aging population’s needs while stabilizing the condo market—a win-win for both sectors.
The Real Estate Institute of Canada (REIC) is at the forefront of shaping innovative solutions for Canada’s evolving real estate market. As the demand for senior housing surges and the condo market faces challenges, REIC equips industry professionals with the expertise, credentials, and strategic insights to navigate these shifts. Through cutting-edge education, market intelligence, and professional development, REIC empowers developers, investors, and policymakers to adapt, innovate, and lead. Whether repurposing underutilized assets or driving new housing solutions, REIC empowers its members to shape the future of sustainable, high-impact real estate investments that address both market needs and social responsibility.
- Meeting the rising demand for senior housing
- Providing a lifeline to struggling condominium developers in major Canadian cities
- Declining prices
- Rising vacancy rates
- Lower demand from younger buyers due to affordability concerns
As developers struggle to sell or lease high-rise condo units, repurposing underperforming or unsold condos into senior housing offers a cost-effective, high-impact solution. Converting existing condo units can be up to 60% cheaper per unit than new construction, making it a viable alternative to traditional senior housing development [8].
The adaptive reuse of existing buildings for senior housing is not without precedent:
- U.S. Conversions: Multiple apartment complexes, offices, and malls have been successfully converted into assisted living facilities, often supported by federal grants.
- Canadian Example: Greenwood Retirement Communities in Brampton, Ontario, transformed a 50-year-old Holiday Inn into a retirement home, reducing per-unit costs to $80,000–$100,000, compared to $250,000+ for new builds. This allowed for affordable rents of $2,500–$2,800 per month—a critical factor in middle-income senior housing [9].
Key Advantages of Condo Conversions
- Prime Urban Locations: High-density CMAs provide easy access to healthcare, amenities, and public transportation—all essential for senior living.
- Cost Savings: Lower renovation costs make it possible to offer more affordable senior housing options while maintaining investor returns.
- Faster Project Delivery: With new construction delays and falling housing starts, conversions allow for a rapid increase in senior housing supply.
- Expansion into High-Demand Markets: High land costs in cities like Toronto and Vancouver make new senior housing projects challenging. Condo conversions bypass this barrier, making urban expansion feasible.
- Government Incentives: Federal programs like the National Housing Strategy could provide funding or tax breaks to support adaptive reuse, particularly for projects struggling due to inadequate pre-leasing.
By leveraging the existing condo supply, senior housing operators and investors can play a pivotal role in addressing the aging population’s needs while stabilizing the condo market—a win-win for both sectors.
The Real Estate Institute of Canada (REIC) is at the forefront of shaping innovative solutions for Canada’s evolving real estate market. As the demand for senior housing surges and the condo market faces challenges, REIC equips industry professionals with the expertise, credentials, and strategic insights to navigate these shifts. Through cutting-edge education, market intelligence, and professional development, REIC empowers developers, investors, and policymakers to adapt, innovate, and lead. Whether repurposing underutilized assets or driving new housing solutions, REIC empowers its members to shape the future of sustainable, high-impact real estate investments that address both market needs and social responsibility.
[1] https://www.statcan.gc.ca/o1/en/plus/7059-older-people-are-all-right
[2] https://www.altusgroup.com/insights/feasibility-of-senior-housing-markets/
[3] https://www.canada.ca/en/employment-social-development/corporate/seniors-forum-federal-provincial-territorial/report-seniors-housing-needs.html
[4] https://www.comfortlife.ca/retirement-community-resources/retirement-cost
[5] https://uwaterloo.ca/canadian-index-wellbeing/sites/default/files/uploads/documents/seniors_and_housing-the_challenge_ahead.pdf
[6] https://www.altusgroup.com/insights/opportunities-in-canada-senior-housing-sector/?utm_source=google&utm_medium=organic
[7] https://www.mpamag.com/ca/mortgage-industry/market-updates/canadas-condo-crisis-pushes-lenders-to-rescue-troubled-projects/514885
[8] https://renx.ca/building-conversion-part-2
[9] https://renx.ca/building-conversion-part-2
[2] https://www.altusgroup.com/insights/feasibility-of-senior-housing-markets/
[3] https://www.canada.ca/en/employment-social-development/corporate/seniors-forum-federal-provincial-territorial/report-seniors-housing-needs.html
[4] https://www.comfortlife.ca/retirement-community-resources/retirement-cost
[5] https://uwaterloo.ca/canadian-index-wellbeing/sites/default/files/uploads/documents/seniors_and_housing-the_challenge_ahead.pdf
[6] https://www.altusgroup.com/insights/opportunities-in-canada-senior-housing-sector/?utm_source=google&utm_medium=organic
[7] https://www.mpamag.com/ca/mortgage-industry/market-updates/canadas-condo-crisis-pushes-lenders-to-rescue-troubled-projects/514885
[8] https://renx.ca/building-conversion-part-2
[9] https://renx.ca/building-conversion-part-2
Allwyn Dsouza is REIC’s Senior Analyst, Market Research and Insights. He can be reached at [email protected]. Media enquiries can be directed to [email protected]