As the latest numbers from the National Investment Center for Seniors Housing & Care attest, it’s getting tougher to keep buildings filled.
The organization’s second quarter report shows that assisted living occupancy levels fell to 86.5%, the lowest level in eight years. That, despite a healthy 3% absorption rate.
So you can bet that finding heads for the beds will be a hot topic in three weeks, when the NIC holds its fall show in Chicago.
As always seems to be the case when things get tough, an assortment of ill-fitting explanations will be put forth by people who probably should know better. Maybe the boomers are losing interest in senior living? Maybe staying at home is gaining in popularity? Maybe the old suburban-centric model just isn’t cutting it?
Speaking of maybe, maybe it’s time to acknowledge the pachyderm in the foyer? You see, senior living circa 2017 doesn’t really have an occupancy problem. Or a losing interest problem. It has a math problem. As in, there’s not enough new demand to keep pace with an ever-increasing supply.
Barely a week goes by where we don’t learn of another project breaking ground. When times are good, it typically takes one of those newbie buildings a year and a half to two years to fill up. Yet they keep on coming.
Large-scale seniors housing is a relatively new phenomenon. And while it survived the Great Recession with a minimum of damage, it has seen more than its share of ups and downs in the past half century.
What this sector could really use right now is fewer buildings, not more. That is, if the main goal is to increase occupancy. But as we’ve all seen, self-regulation tends to be in short supply when there are visions to realize and deals to be made.
The market has an uncanny ability to right itself when things get out of whack. Those who choose to keep ignoring that reality would be advised to proceed with caution.
John O’Connor is editorial director of McKnight’s Senior Living. Email him at [email protected].