News & Press Releases

Occupancy of Seniors Housing Remained Stable at 88%

Nationwide inventory growth and construction starts slowed

 

FOR IMMEDIATE RELEASE: April 11, 2019

Contact: Gwendolyn Tom, 202-868-4831, gtom@MessagePartnersPR.com

 

ANNAPOLIS, Md.—The occupancy rate for seniors housing across the United States remained virtually unchanged at 88.1% in the first quarter of 2019, according to just-released data from the National Investment Center for Seniors Housing & Care (NIC), a non-profit organization that provides independent research and analytics to promote access and choice in seniors housing.

Occupancy increased 0.1 percentage point from the previous quarter and decreased 0.2 percentage point from one year ago. Occupancy for the first quarter of 2019 was 2.1 percentage points below its most recent high of 90.2% in the fourth quarter of 2014.

“Occupancy in seniors housing properties remained stable nationally but varied greatly from market to market,” said Chuck Harry, NIC’s head of research and analytics. “Local markets can vary due to changes in local economic performance, barriers to entry such as zoning and regulations, shifting demographics, and other factors.”

Of the 31 metropolitan markets that comprise NIC’s Primary Markets, the highest first quarter U.S. occupancy rates occurred in San Jose, CA (94.4%) and in Baltimore, MD (92.1%). The lowest first quarter occupancy rates were in Houston, TX (81.4%) and San Antonio, TX (82.0%).

NIC data show the largest occupancy increase from a year ago occurred in San Antonio, TX (from 78.5% in the first quarter of 2018 to 82.0% during the same period in 2019). The largest decrease occurred in Cleveland, OH (from 86.0% in the first quarter of 2018 to 82.7% during the same period of 2019).

Harry added: “The thirteen percentage point spread in occupancy across these major U.S. markets is exceptionally wide when compared to other commercial property types.”

NIC data suggest a possible slowing in new seniors housing construction. Seniors housing construction starts during the first quarter of 2019, located in NIC’s 31 Primary Markets, totaled 4,003 units, which include 2,236 independent living units and 1,767 assisted living units. Starts totaled 19,367 units across the previous four quarters. Data on quarterly construction starts are considered preliminary as they often are revised in subsequent quarters as additional information becomes available.

“We continue to see strong demand for seniors housing nationally, as demand slightly exceeded inventory growth in the first quarter, albeit by a relatively small amount,” said Beth Burnham Mace, NIC’s chief economist. “At the same time, inventory growth appears to be cooling, due to a slowdown in construction starts, raising the possibility that demand for seniors housing might better align with supply later this year.”

Other NIC data released as part of its quarterly report show:

  • Occupancy rates for independent living and assisted living properties averaged 90.4% and 85.5%, respectively, during the first quarter of 2019. Independent living occupancy was up 0.1 percentage point from the prior quarter and unchanged from a year ago. Assisted living occupancy remains relatively low and was up only 30 basis points from the all-time low of 85.2% reached in the second quarter of 2018. It was also up 0.1 percentage point from the fourth quarter but declined 0.2 percentage point from a year ago.
  • The nursing care occupancy rate increased to 86.7% in the first quarter of 2019 from 86.3% in the fourth quarter of 2018. The nursing care annual inventory growth rate was -0.3% in the first quarter of 2019, while annual absorption was -0.2%. Private pay rents for the sector grew 2.6% year over year this quarter, up 0.1 percentage point from year-earlier levels.
  • The pace at which available seniors housing units were leased on a net basis—or the absorption rate—was 3.0% as of the first quarter of 2019, up 0.3 percentage point from the fourth quarter of 2018, and up 0.7 percentage point from one year earlier. The annual inventory growth rate in the first quarter of 2019 stood slightly higher than the absorption rate at 3.1%, declining 0.4 percentage point from the fourth quarter.
  • Preliminary data on construction as a share of existing inventory for seniors housing was 6.7% in the first quarter of 2019, 0.8 percentage point below its recent high of 7.5% in the fourth quarter of 2017.
  • During the first quarter of 2019, the average rate of seniors housing’s annual asking rent growth was 3.0%, unchanged from the prior quarter and down from a recent high of 3.8% in the fourth quarter of 2016.

A summary of the NIC MAP Data Market Fundamentals for 1Q19 is below.

[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 www.nic.org, and follow NIC on Twitter and LinkedIn.

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