NIC Research & Data
NIC MAP® Market Signals
1Q10 Market Signal: Construction Pipeline is Emptying, but…
Much has been made of the lack of new construction activity and ensuing emptying of the construction
pipeline for seniors housing properties in MAP31. And with good reason; as of 1Q10 there remain just
78 seniors housing properties comprising 8,897 units under construction. This is a far cry from just
two years ago (1Q08), when there were 159 properties and 20,601 units under construction. Construction
starts have slowed considerably as well; over the past year, construction began on just 3,886 units
within seniors housing properties, down 73.6% from 1Q08, when construction starts totaled 14,700 units
during the previous 12 months. With the decline in the construction pipeline and the dearth of new starts,
it is easy to see why investors might be intrigued by near to medium term supply prospects in seniors
housing.
But the slowdown in construction has not yet translated into a slowdown in supply growth. In fact, seniors
housing inventory is still growing at levels above 2,000 units per quarter. In 1Q10, the seniors housing
inventory grew by 2,099 units. Over the past 4 quarters, the inventory has grown by 11,826 units or
2.4%. This level of growth is near recent cyclical highs when annual inventory grew by 2.6% in 2Q08
and 3Q08. These recent levels of growth are indicative of many projects that began in 2007 and 2008
that are opening in 2009 and 2010.
Going forward, it is not until 4Q10 when inventory growth is expected to fall well below the 2,000 unit
per quarter growth threshold. As of 1Q10, 4,845 seniors housing units are expected to open over the
next 2 quarters. This number is subject to change as project open dates are adjusted and new projects
enter the pipeline. So, while the prospects for a significant downturn in supply growth for seniors
housing properties are indeed intriguing, they may be medium term prospects, rather than short term.
Each quarter, NIC MAP provides insights, trends and analysis on over 12,300 properties on the 100 largest
MSAs. To update your analysis of seniors housing properties in your market(s), please visit
www.nicmap.org.
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