National Investment Center for Seniors Housing & Care Chief Economist Beth Burnham Mace.
A significant rebound in demand combined with a modest increase in supply contributed to a 1.4 percentage point increase in senior housing (independent living and assisted living combined) occupancy in the third quarter, according to NIC MAP data released Thursday.
Occupancy inched up to 80.1% from a pandemic-related low of 78.7% in the second quarter.
Demand increased by 12,318 units in the primary markets tracked by NIC MAP. This increase was the strongest unit increase since NIC MAP Vision began reporting the data in 2005, the organization said. At the same time, however, inventory increased by 3,441 units, the smallest unit count increase since the first quarter of 2019, and the number of units under construction represented the fewest since 2015.
“Notably, senior housing construction starts amounted to only 1.9% of the existing inventory in the third quarter on a rolling four-quarter basis, one of the lowest rates since 2011,” Beth Burnham Mace, chief economist for the National Investment Center for Seniors Housing & Care, said in a statement. “Industry leaders should keep an eye on this trend, because it suggests that there may be a window of limited inventory growth and potential promising investment opportunities next year.”
Occupancy increased across all sectors — assisted living, independent living and skilled nursing, according to NIC MAP.
In assisted living, occupancy increased to 76.9%, up from a pandemic low of 75.4% in the first quarter but still below its pre-pandemic level of 85%.
In independent living, occupancy increased to 83.2%, up from a pandemic low of 81.8% in the first quarter but still below its pre-pandemic level of 89.7%.
By comparison, skilled nursing occupancy increased to 76.3%, up from its pandemic low of 74.1% in the first quarter but still below its pre-pandemic level of 86.6%.
Chuck Harry, NIC’s chief operating officer, called the increases in occupancy and demand, as well as the slowdown in inventory growth, “encouraging for the trajectory of the occupancy recovery.”
“But it’s important to acknowledge that the senior housing occupancy rate is still well below its pre-pandemic peak, so we need to continue to monitor future data before declaring recovery from the pandemic,” he said in a statement.
Of the 31 metropolitan markets that encompass NIC MAP’s primary markets, the highest senior housing occupancy rates were seen in San Jose, CA (85.9%), San Francisco (84.5%) and Portland, OR (84.3%). The markets with the lowest occupancy rates were Houston (74.8%), Cleveland (75.5%) and Atlanta (75.8%).