After five quarters of negative absorption during the pandemic, life plan community unit absorption not only rebounded in the third quarter but has achieved its strongest pace since the fourth quarter of 2008, according to analysis published Wednesday by specialty investment bank Ziegler and the National Investment Center for Seniors Housing & Care.
“This (and negative inventory growth) helped push occupancy up to 85.4%, which is 1.1 percentage points above its pandemic period low during the previous quarter but still 6.2 percentage points below its pre-pandemic occupancy rate in the first quarter of 2020 (91.6%),” wrote Lana Peck, senior principal at NIC.
Non-life plan community occupancy averaged 77.1% in the third quarter, which was 8.3 percentage points lower than life plan community occupancy, according to the analysis. On a year-over-year basis, entrance fee life plan community occupancy (88%) was 6.9 percentage points higher than rental life plan communities (81.1%), and not-for-profit life plan community occupancy (87%) was 6 percentage points higher than for-profit life plan communities (81%).
Independent living had the highest occupancy (89.1%) within life plan communities, followed by assisted living and memory care (84% and 83.3%, respectively). The difference in third quarter occupancy between life plan communities and non-life plan communities was the highest for the independent living segment (8.7 percentage points) and the lowest for the skilled nursing segment (2.8 percentage points).
Sixty-one percent of the life plan community sector’s growth comes from expansions to existing properties, and 39% comes from new construction, according to the analysis. New construction in the life plan community sector mostly has been in the Washington D.C., Memphis, TN, Minneapolis, Baltimore and Orlando, FL, markets. Almost three-fourths of for-profit new life plan community construction (71%, or 1,400 units) and approximately one-half of not-for-profit new life plan community construction (51%, or 378 units) is in the Washington, D.C. area.