Assisted living occupancy increased to 85.7% in the fourth quarter of 2019, up from a record low of 85.1% in the second quarter as demand outpaced new inventory growth, according to data released Thursday by the National Investment Center for Seniors Housing & Care.
The rate marked the strongest occupancy in assisted living in two years, NIC said.
“It appears that 2019 was an inflection year for assisted living, with the occupancy rate at its highest level in two years after having reached its trough and new construction continuing to slow,” Chuck Harry, NIC’s head of research and analytics, said in a statement.
Overall, senior housing occupancy (independent living and assisted living combined) rose nationwide in the fourth quarter, up 0.1% from the third quarter, to 88%, NIC said.
Regional markets saw wide variation in occupancy. San Jose (95.7%) and New York (91.3%) had the highest occupancy rates of the 31 metropolitan markets that comprise NIC’s primary markets. Atlanta (82.7%) and Houston (82.5%), on the other hand, recorded the lowest occupancy rates.
Las Vegas had the largest occupancy increase from a year ago, going from 80.3% to 84.1% in that time. Cincinnati saw the largest year-over-year decrease, falling from 89.7% to 86.4%.
Continuing care retirement / life plan communities reported higher occupancy rates than non-CCRC properties in the fourth quarter (91.2% versus 86.3%, respectively), due in part to lower inventory growth for CCRCs compared with other property types, NIC said.
For the year, net absorption totaled 15,643 units for senior housing, the most units demanded on a net basis for a full year since NIC began reporting the data in 2006. Inventory growth decelerated from 21,479 units in 2018 to 16,750 units in 2019 but nevertheless was stronger than net demand, NIC said.
“Demand was strong, but simply not strong enough to offset the growth in inventory,” NIC Chief Economist Beth Burnham Mace said in a statement. “The slowdown in starts and in the number of units under construction suggest an improving outlook for senior housing, especially for assisted living.”
NIC’s primary markets saw 17,718 new construction starts in the past four quarters, the fewest new starts since 2014. These construction starts amounted to 2.8% of total existing senior housing inventory, down from 3.8% a year ago and 4.6% in early 2018.