Occupancy may be on the way up from the bottom for both stand-alone memory care communities and other memory care units, according to the National Investment Center for Seniors Housing & Care.
The sector still faces several challenges, however, research statistician Anne Standish wrote in a Wednesday blog post.
First-quarter occupancy for stand-alone memory care communities was 82.7% in the 31 primary markets followed by NIC, Standish said. That’s an increase of 120 basis points since the recent low of 81.5% in the second quarter of 2018.
Stabilized occupancy in freestanding communities, including units that have been opened but not yet leased, was 85.7% in the first quarter, 300 basis points higher than total occupancy, she said.
The growth, according to NIC, “reflects a strong year” for the property type.
Falling occupancy has been the broad trend for freestanding memory care communities and memory care units in general since NIC began reporting data on the sector in 2006, Standish wrote. That’s because inventory growth has outpaced demand, as measured by net absorption.
But inventory growth is slowing, she said.
Memory care as a segment, including units in stand-alone communities and units within other types of communities, had an occupancy rate of 83.3% in the first quarter and experienced the fewest units of inventory growth, 489, since the third quarter of 2010, Standish said. That’s down from an inventory growth of 1,490 units in the fourth quarter of 2018 and the recorded high inventory growth of 2,097 units in the second quarter of 2018.
Despite improvement, Standish said, “with occupancy still in the low 80% range, the sector faces challenges as operators and investors seek to meet their business plan requirements and pro formas.” Among the challenges, she added, is establishing an equilibrium after the record high inventory growth and absorption in 2018.
“Because of current predictions of rising dementia rates, and the special considerations associated with serving this population, operators who offer memory care should not only anticipate potential changes in demand when planning their offerings but also how to recruit and keep excellent employees who understand the needs of this population,” Standish said.
As of the first quarter, she said, 89% of open memory care communities in the primary markets were freestanding, and 97% of the open communities were run by for-profit operators.
The full blog post contains more details.