Seniors Housing Occupancy Falls, Rent Growth Continues

May 13, 2010

Press Release

Press Room – 2010 NIC Press Releases


NIC MAP® Data Also Shows Shrinking of Construction Pipeline

Contact: Renee Tilton, (410) 626-0805 or

Annapolis, Md. – Occupancy rates fell for seniors housing in the first quarter of 2010, while rent growth continued but at a slower pace than seen in the previous two years, according to NIC MAP, a data and analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC). The data for the top 31 metro markets also showed that a significant shrinking of the construction inventory pipeline continues, fueled by a combination of project openings and declining construction starts.

The average occupancy rate fell to 88.0% for seniors housing (both independent living and assisted living properties) during the first quarter of 2010, down from 88.3% in 4Q09. Specifically, the average occupancy rate was 87.9% for independent living properties and 88.1% for assisted living properties in 1Q10. In comparison, the average occupancy rate during 4Q09 was 88.2% percent for independent living properties and 88.4% for assisted living properties.

Independent living supply in the top 31 metro markets totaled 322,225 units in 1Q10, with 283,211 total occupied units. In the same quarter, assisted living supply totaled 174,010 units, with 153,330 total occupied units. The seniors housing inventory has grown 11,826 units during the previous four quarters, whileabsorption during that time has been 6,108 units.

“We’ve seen a general theme develop over the past few years,” said Michael Hargrave, vice president – NIC MAP. “There’s been erratic absorption over the last four quarters, and inventory growth has outpaced demand, but overall absorption has developed a marginally positive trend.”

In comparison, a long trend of negative absorption for skilled nursing disappeared in the first quarter of 2010 and became marginally positive. Skilled nursing occupancy rates rose to 89.0% in 1Q10, compared to 88.8% in 4Q09. During the previous eleven quarters, demand in this sector had consistently declined. “This was the first quarter of positive absorption in three years,” says Hargrave.

The first quarter of 2010 again showed positive rent growth for seniors housing, although the pace continues to slow. The average monthly rent (AMR) per unit for independent living was $2,701 during 1Q10, which is up 1.5% on a year over year basis. For assisted living, the AMR was $3,528 in 1Q10, up 1.4% on a year over year basis. For seniors housing properties in general, year over year rent growth in the first quarter of 2010 was 1.5%, which is slower than the pace a year ago (2.6%) and two years ago (3.7%).

“Although rent growth has slowed, it has continued to remain positive,” said Hargrave. “This is in sharp contrast to what we have seen in other forms of commercial real estate, and it indicates that seniors housing continues to grow and perform as a real estate asset class.”

Rents for skilled nursing continued to grow in 1Q10. For the first quarter of 2010, the AMR for skilled nursing was $7,928, which is up 3.3% on a year over year basis.

For independent living, the trailing-twelve month (TTM) construction activity was 0.8% of existing inventory in 1Q10, compared to 1.4% a year ago. TTM construction activity was 0.8% in 1Q10 for assisted living, compared to 1.2% in 1Q09.

“The overall construction pipeline has shrunk 57% from 2008 to 2010. We’re continuing to see inventory growth, but we’re not seeing enough new projects to replace what was in the pipeline,” said Hargrave.

For skilled nursing, TTM construction activity was 0.3% in 1Q10, which was the same as a year ago in 1Q09.

NIC Seniors Housing & Care Key Metrics for 1Q10
Independent Living Assisted Living Nursing Care
1Q10 1Q09 1Q10 1Q09 1Q10 1Q09
Occupancy Rate¹ 87.9% 89.3% 88.1% 88.2% 89.0% 89.4%
Average Monthly Rent per Unit² $2,701 $2,660 $3,528 $3,481 $7,928 $7,674
TTM Construction Starts
vs. Current Inventory³
0.8% 1.4% 0.8% 1.2% 0.3% 0.3%
  1. The occupancy rate is the percent of units/beds in all properties which are occupied.
  2. Average monthly rent per unit includes base rates and monthly care fees and is private pay only; it does not include ancillary service and move-in fees, and does not factor in the impact of concessions.
  3. TTM construction starts vs. current inventory is the trailing-twelve month sum of units/beds that started construction divided by the inventory in the last quarter.

Source: NIC MAP® Data & Analysis Service

About NIC

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 or call (410) 267-0504.