News & Press Releases
Seniors Housing Occupancy Rate Steady at Relatively Weak 88.8% in Fourth Quarter
Assisted Living Occupancy Rate Near Cyclical Low, While Independent Living Occupancy Rate Remains Above 90%
FOR IMMEDIATE RELEASE: Thursday, January 11, 2018
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ANNAPOLIS, Md. – The occupancy rate for seniors housing properties averaged 88.8% in the fourth quarter of 2017 unchanged from the prior quarter and down 0.7 percentage point from year-earlier levels. This placed occupancy 1.8 percentage points above its cyclical low of 87.0% reached during the first quarter of 2010 and 1.4 percentage point below its most recent high of 90.2% in the fourth quarter of 2014.
The occupancy rates for independent living properties and assisted living properties averaged 90.6% and 86.5%, respectively, during the fourth quarter of 2017. The occupancy rate for independent living was unchanged from the prior quarter and down 0.5 percentage point from year-earlier levels. The occupancy rate for assisted living was unchanged from the third quarter. The occupancy rate for assisted living was down 1.0 percentage point from year-earlier levels.
Seniors housing annual absorption was 2.4% as of the fourth quarter of 2017, unchanged from the third quarter of 2017 and down 0.1 percentage point from one year earlier. The seniors housing annual inventory growth rate in the fourth quarter of 2017 was 3.2%, down 0.2 percentage point from the third quarter.
“The occupancy rate for seniors housing was unchanged in the fourth quarter, but remained relatively weak at 88.8%, as inventory growth continues to outpace demand,” said Beth Burnham Mace, chief economist of NIC. “It is also notable that the difference between stabilized and total occupancy was wide at 1.5 percentage points, reflecting a large amount of recently opened units that have not yet been leased. This unfilled inventory adds competitive pressure to the market and puts downward pressure on rate growth.”
Preliminary data on construction as a share of existing inventory for seniors housing remained the same as in the third quarter at 6.6% and was 0.4 percentage point below its recent high of 7.0% in the third quarter of 2016.
Seniors housing construction starts within the 31 Primary Markets during the fourth quarter of 2017 preliminarily totaled 6,069 units, which included 2,758 independent living units and 3,311 assisted living units. On a preliminary four-quarter basis, starts totaled 20,686 units. Construction starts data is often revised retrospectively in subsequent quarters as additional information becomes available.
“Despite the sustained softness in assisted living occupancy, assisted living properties continue to comprise the majority of the seniors housing units under construction,” said Chuck Harry, NIC’s chief of Research & Analytics. “In fact, the seniors housing construction level shares of 61% assisted living and 39% independent living have been quite steady for the last eight quarters dating back to the first quarter of 2016.”
During the fourth quarter of 2017, the average rate of seniors housing’s annual asking rent growth was 2.6%, down 0.1 percentage point from the prior quarter and down from 3.7% in the fourth quarter of 2016. For comparison purposes, labor expense growth as measured by the annual change in assisted living average hourly earnings was 5.3% in the third quarter, according to the Bureau of Labor Statistics.
The nursing care occupancy rate decreased to 86.1% in the fourth quarter of 2017 from 86.2% in the third quarter of 2017. The nursing care annual inventory growth rate was -0.1% in the fourth quarter of 2017, while annual absorption was down by -1.0%. Private pay rents for the sector grew 2.5% year over year this quarter, down 0.2 percentage point from year-earlier levels.
[Note: For 4Q17 NIC MAP data specific to your local metro market, please refer to the regional key metrics charts.]Download Abridged Presentation Now
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.
Since 1991, NIC has been the leading source of research, data, and analytics for owners, operators, developers, capital providers, researchers, academics, public policy analysts, and others interested in meeting the housing and care needs of America’s seniors. NIC has proudly sponsored the Seniors Housing & Care Journal, a peer-reviewed journal for applied research in the seniors housing and care field, since 1993. One of NIC’s major initiatives to further its mission is the NIC MAP® Data Service (NIC MAP). NIC MAP’s web-based suite of research and analytic tools track and report seniors housing and care data for more than 14,000 properties within 140 U.S. metropolitan markets. Established in 2004, NIC MAP creates transparency for seniors housing and care by offering accurate, unbiased, and actionable market-level data on all of the sector’s property types and care segments, including independent living, assisted living, memory care, and nursing care, as well as continued care retirement communities (CCRCs). Our data is updated quarterly, monthly, and weekly, and is inclusive of property-level inventory by unit type, sales transactions, properties under construction and in the planning phase, aggregated occupancy and rent comparables, demographics, and much more. For more information, call 410-267-0504.