News & Press Releases
4Q09 Data Shows Seniors Housing Occupancy Falls, While Rents Continue to Rise
Press Room – 2010 NIC Press Releases
4Q09 DATA SHOWS SENIORS HOUSING OCCUPANCY FALLS, WHILE RENTS CONTINUE TO RISE
NIC Data Also Show Construction Pipeline Continues to Empty
FOR IMMEDIATE RELEASE: March 4, 2010
Contact: Renee Tilton, (410) 626-0805 or email@example.com
Annapolis, Md. – Occupancy rates fell for seniors housing in the fourth quarter of 2009, while rents continued to grow, according to NIC MAP, a data and analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC). In addition, the data showed that the construction pipeline continued to empty as new product came on board, and the level of starts dropped off precipitously.
After seeing the average occupancy rate rise slightly for seniors housing (both independent living and assisted living properties) during the 3Q09, it fell to 88.2% during the 4Q09. In comparison, the average occupancy rate during the fourth quarter of 2008 stood at 89.8% percent for independent living properties or continuing care retirement communities with a majority of independent living units; it was 88.9% for assisted living properties.
“At the same time, our fourth quarter 2009 data was the third straight quarter where seniors housing registered positive absorption, indicating positive demand growth,” said Robert G. Kramer, president of NIC. “More people have been living in seniors housing in the past year, so the industry is growing in terms of consumer demand.”
So why has occupancy fallen? “Supply grew faster than demand during the quarter, which led to an overall lower occupancy rate,” explained Kramer. “But the construction pipeline is emptying out as more units come online. In addition, the rate of starts has slowed significantly. And with the very tight credit markets, that situation is unlikely to change anytime soon. This could be very positive news for occupancy growth in seniors housing in 2011 and 2012.”
The fourth quarter of 2009 also confirmed that although rents remained positive, overall rent growth continued to slow for seniors housing. “This continues a trend that we’ve seen since 2007,” said Michael Hargrave, vice president – NIC MAP. “Year over year rent growth is now 1.6%. This reflects an increasing percentage of seniors housing operators that are choosing to keep rents steady, rather than passing through annual rent increases to their residents.”
The average monthly rent (AMR) per unit for independent living was up slightly during the 4Q09 to $2,659, which compared to $2,618 year over year. For assisted living, the AMR was $3,536 in the 4Q09, up from $3,478 during the 4Q08.
For independent living, the trailing-twelve month (TTM) construction activity was just 0.5% of existing inventory in 4Q09. New construction starts for assisted living were only slightly better at 0.6%.
In looking at performance trends for skilled nursing, the average occupancy rate continued its slow, steady decline. For 4Q09, it was 88.7%. Year over year, the average occupancy rate was 89.4% in 4Q08.
Also during 4Q09, skilled nursing had the least amount of construction activity of any seniors housing and care property type. “We saw less construction in skilled nursing than we’ve seen in a long time,” said Hargrave. “In fact, the amount of construction did not even keep up with the number of beds that were taken out of service, which were 1,291 beds last year in the top 31 metro markets.”
Lastly, the average monthly rent growth went up more for skilled nursing than the seniors housing sector. Year over year, rent growth for skilled nursing was 3.1%. The average monthly rent per unit was $7,830 in the fourth quarter of 2009; it was $7,597 in the fourth quarter of 2008.
Founded in 1991, the National Investment Center for the Seniors Housing & Care Industry is a nonprofit education and research organization providing information about business strategy and capital formation for the senior living industry. NIC is the leading provider of historical and trend data on the industry through its NIC MAP® Data and Analysis Service that tracks properties in the 100 largest metropolitan areas and its Key Financial Indicators™ (KFIs) that report nationwide statistics. Proceeds from its annual conference and other events are used to fund data and research on issues of importance to lenders, investors, developers, operators, and others interested in meeting the housing and care needs of America’s seniors. For more information, visit www.NIC.org or call (410) 267-0504.