The size of a skilled nursing facility can have important ramifications for the services they provide, especially as many facilities are engaging in higher acuity services and more frail patients. Four-bed wards and even triples became a thing of the past (mostly) more than 10 to 15 years ago. You need a lot more room to provide quality therapy programs, and with increasing demand for private rooms, or at a minimum large semi-private rooms, small facilities on a square foot per bed basis have become less desirable in the market, both for buyers as well as consumers. Most nursing facilities built today have at least 400 square feet per bed, and often much more. But in the past, many had 250 square feet per bed, often because of the shared rooms. In 2015, 28% of the sales were properties with less than 300 square feet per bed, but this dropped to just 14% in 2016, according to the Senior Care Acquisition Report. On the other end of the spectrum, 39% of the sales had more than 400 square feet per bed in 2015, but this increased to 49% in 2016.

That trend helped contribute to the record average price paid per square foot, in a year when per-bed prices also reached new heights for skilled nursing. The average jumped by 40% from 2015’s record of $183 per square foot, to $256 per square foot in 2016 sales. The median also set a record at $241 per square foot. These records were the result of some expensive portfolio sales with an average price per square foot over $300. Buyers do not really pay much attention to the square foot cost, as they are buying a cash flow stream, but it is always a good check on replacement cost.