News & Press Releases

Seniors Housing Fundamentals Soften, Occupancy Recovery Stalls

FOR IMMEDIATE RELEASE: Friday, July 12, 2013
Contact: Biba Aidoo, (410) 267-0504 or baidoo@nic.org

SENIORS HOUSING FUNDAMENTALS SOFTEN, OCCUPANCY RECOVERY STALLS

NIC MAP® Data Shows Slower Absorption, Slower Rent Growth, and Increased Construction Activity

ANNAPOLIS, Md. – The upward momentum in seniors housing occupancy stalled during the second quarter of 2013, while the pace of annual rent growth slowed and overall construction activity rose, according to NIC MAP®, a data and analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC).
Overall, the average occupancy rate for seniors housing properties in the second quarter of 2013 was 89.0%, a nominal decrease of 0.1 percentage points from the prior quarter and a 0.4 percentage point increase from a year earlier. The second quarter of 2013 marked the second quarter in a row with flat to slightly declining occupancy after consecutive quarterly occupancy gains since the first quarter of 2010. While the recovery in occupancy has recently stalled, it remains 2.1 percentage points above its cyclical low of 86.9% during the first quarter of 2010.

The occupancy rate for independent living properties and assisted living properties averaged 89.2% and 88.7%, respectively, during the second quarter of 2013. Compared to the prior quarter, independent living occupancy declined by 0.2 percentage points, while assisted living occupancy remained unchanged. The occupancy rate for independent living is now 2.4 percentage points above its cyclical low, while the occupancy of assisted living is 2.0 percentage points above its respective cyclical low. “While assisted living outperformed independent living in terms of occupancy this quarter, assisted living occupancy could face more downward pressure in the near-term as its construction activity continues to rise,” says Mike Hargrave, NIC’s chief market & data strategist.

During the second quarter of 2013, seniors housing’s annual asking rent growth slowed to 1.8%, and was 0.2 percentage points below its pace one year earlier during the second quarter of 2012. “While seniors housing rent growth overall slowed, its slowing was driven primarily by independent living properties. Annual rent growth in independent living properties slowed by 80 basis points, while the pace of annual rent growth in assisted living properties slowed by only 10 basis points,” says Chuck Harry, NIC’s managing director and director of research and analytics.

Seniors housing annual absorption was 1.8% as of the second quarter of 2013, compared to 2.2% during the first quarter of 2013 and 2.4% during the second quarter of 2012. “The spread between annual absorption and annual inventory growth is at its lowest point since the fourth quarter of 2010. Based on the construction pipeline, inventory growth will likely begin to accelerate modestly in the near-term, which may cause the delta to compress further. A compressing delta between these measures would challenge continued occupancy recovery,” says Harry.

In the second quarter of 2013, the seniors housing annual inventory growth rate was 1.3%, which is near where it has oscillated since the fourth quarter of 2011. Currentconstruction as a share of existing inventory for seniors housing was 2.8%, which is 0.1 percentage points above that of the previous quarter.

The nursing care occupancy rate was 87.6% in the second quarter of 2013, which is a decrease of 0.4 percentage points from the first quarter of 2013.

Nursing care annual inventory growth was -0.2% in the second quarter of 2013, continuing the established trend of slightly declining inventory growth. Private pay rents for the sector grew 2.9% year-over-year this quarter, which is similar to the pace of the prior quarter.

National NIC MAP Data-Second Quarter 2013

About NIC

The National Investment Center for the Seniors Housing & Care Industry (NIC) is a 501(c)(3) organization whose mission is to facilitate informed investment in the industry. NIC’s NIC MAP® Data and Analysis Service tracks more than 12,600 properties on a quarterly basis in the 100 largest metropolitan markets. Proceeds from NIC’s national conference and other events are used to fund data and research on issues of importance to lenders, investors, providers, developers, 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.

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