Fourth Quarter Registers the Highest Increase in Occupied Seniors Housing Units Since NIC Began to Report the Data in 2006
FOR IMMEDIATE RELEASE: January 10, 2019
Contact: Mary Ann Donaghy, 301-974-5797; madonaghy@nic.org
ANNAPOLIS, Md. – The occupancy rate for seniors housing across the United States was steady in the fourth quarter of 2018, according to new data from the National Investment Center for Seniors Housing & Care (NIC), a non-profit organization that provides data and analytics on the sector.
Occupancy in U.S. seniors housing properties averaged 88.0% in the fourth quarter of 2018, up 0.1 percentage point from the prior quarter and down 0.7 percentage point from a year ago. Current occupancy is 2.2 percentage points below its most recent high of 90.2% in the fourth quarter of 2014.
“Not only was the fourth quarter’s increase in occupied seniors housing units the highest recorded since NIC began reporting the data back in 2006,” said Chuck Harry, NIC’s chief of Research & Analytics, “the fourth quarter was the first quarter of the past three years during which the growth in occupied units managed to keep pace with the number of new units that came on line.” Harry added, “In other words, this was the first quarter since the fourth quarter of 2015 during which the consumers’ increased demand for seniors housing kept pace with the increase in the inventory of new units. New demand and new supply during the quarter were on par with each other.”
The occupancy rates for independent living and assisted living properties averaged 90.2% and 85.4%, respectively, during the fourth quarter of 2018. The occupancy rate for independent living was up 0.1 percentage point from the prior quarter and down 0.5 percentage point from a year ago. The occupancy rate for assisted living was unchanged from the third quarter. The occupancy rate for assisted living was down 0.9 percentage point from a year ago.
Seniors housing annual absorption was 2.6% as of the fourth quarter of 2018, up 0.1 percentage point from the third quarter of 2018 and up 0.3 percentage point from one year earlier. The seniors housing annual inventory growth rate in the fourth quarter of 2018 was 3.5%, up 0.1 percentage point from the third quarter.
Preliminary data on construction as a share of existing inventory for seniors housing was 6.0% in the fourth quarter of 2018 and was 1.3 percentage point below its recent high of 7.3% in the fourth quarter of 2017.
Seniors housing construction starts within the 31 Primary Markets during the fourth quarter of 2018 preliminarily totaled 3,247 units, which included 1,695 independent living units and 1,552 assisted living units. On a preliminary four-quarter basis, starts totaled 16,680 units. Construction starts data is often revised retrospectively in subsequent quarters as additional information becomes available.
During the fourth quarter of 2018, the average rate of seniors housing’s annual asking rent growth was 3.0%, up 0.1 percentage point from the prior quarter and down from a recent high of 3.8% in the fourth quarter of 2016. For comparison purposes, labor expense growth as measured by the annual change in assisted living average hourly earnings was 4.3% in the third quarter, according to the Bureau of Labor Statistics.
“Year-over-year quarterly hourly earnings growth for assisted living has exceeded 4% since early 2017, more than in many other sectors,” said Beth Burnham Mace, chief economist for NIC. “Because labor expenses account for roughly 60% of an operator’s expenses, this ongoing wage growth is putting pressure on operator’s ability to grow NOI, especially in markets where revenue growth is being impaired by weak occupancy and slower rent growth.”
The nursing care occupancy rate increased to 86.3% in the fourth quarter of 2018 from 86.0% in the third quarter of 2018. The nursing care annual inventory growth rate was -0.4% in the fourth quarter of 2018, while annual absorption was also -0.4%. Private pay rents for the sector grew 2.6% year over year this quarter, unchanged from year-earlier levels.
A summary of the NIC MAP Data Market Fundamentals for 4Q18 is below. Additional details and a downloadable report can be found here.
[Note: For the latest NIC MAP data specific to your local metro market, please refer to the regional key metrics charts.]
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About NIC
The National Investment Center for Seniors Housing & Care (NIC) is a 501(c)3 organization established in 1991 whose mission is to enable access and choice by providing data, analytics, and connections that bring together investors and providers. For more information, visit natinvcenterdv.wpengine.com, and follow NIC on Twitter and LinkedIn.