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Sustained supply-demand trends could drive senior living occupancy rates to return to pre-pandemic levels in 2024, according to NIC MAP Vision and the National Investment Center for Seniors Housing & Care.

The senior living (assisted living and independent living combined) occupancy rate for the 31 NIC MAP primary markets continued to see gains from the previous quarter, increasing 0.8 percentage points from 83.6% in the second quarter to 84.4% in the third quarter, according to the NIC MAP market fundamentals report, released Thursday.

This action represents the ninth consecutive quarter of occupancy recovery, driven by “record-high” rates of demand, NIC said. The data also showed that third-quarter net absorption was almost three times new supply, and the total number of occupied units also continued to climb to record levels, according to NIC.

Senior living occupancy increased 6.6 percentage points overall from a pandemic low of 77.8% in the second quarter of 2021, but it remained 2.7 percentage points below the pre-pandemic level of 87.1% in the first quarter of 2020, according to NIC.

Boston (89.9%), Baltimore (88%) and Tampa, FL (87%) had the highest occupancy rates of the NIC MAP primary markets, whereas Houston (79.4%), Las Vegas (79.7%) and Atlanta (81%) had the lowest occupancy rates.

“Several consecutive quarters of especially strong demand suggest that the need for the care and housing provided by senior housing is recognized,” NIC Chief Operating Officer Chuck Harry said in a statement. “If demand and supply trends continue at their current pace, senior housing occupancy will recover during 2024.”

AL versus IL

Demand outpaced supply for both assisted living and independent living properties, but assisted living continued its faster recovery compared with independent living, according to the data. 

Assisted living occupancy rates within the NIC MAP primary markets improved 0.9 percentage points from the prior quarter, to 82.6%, whereas the independent living occupancy rate improved 0.7 percentage points to 86.1%.

Assisted living occupancy in the NIC MAP secondary markets already has fully recovered and is 0.1 percentage point above the 84.2% pre-pandemic level.

Tight financing continues to influence senior living inventory growth and new construction, according to NIC. Inventory grew by 0.4% from the prior quarter, whereas year-over-year inventory growth was 1.3%, close to its smallest year-over-year increase since 2012. 

The number of senior living units under construction relative to the total existing senior living inventory was 4.7%, down 3 percentage points from the high of 7.7% in the fourth quarter of 2019 and the lowest since 2014.

Despite that strong demand, 109,358 units remain unoccupied in the NIC MAP primary markets, and 32,722 units are under construction, NIC said.

“The story of the past several quarters has been strong demand and slow inventory growth, but a significant number of units remain unoccupied,” NIC Senior Principal Caroline Clapp said in a statement. “Senior housing and care operators are well-positioned to meet the needs of older adults who increasingly need these services.”