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Improving lead volumes in senior living and a recent increase in construction lending reflect expectations that development pipelines will increase soon, according to the latest NIC Executive Survey Insights report.
But challenges to the practicality of new construction and timelines persist due to labor and key materials shortages, as well as relatively high costs, according to NIC Senior Principal Lana Peck.
The Wave 34 survey of operators in senior living (independent and assisted living) and skilled nursing between Oct. 4 and Nov. 7 added a new question aimed at gauging operator interest in diversifying to serve a different resident.
Although approximately two-thirds (64%) of responding organizations indicated that they were not considering changing their product mix, 23% reported considering expanding their offerings toward settings serving older adults with fewer activities of daily living or healthcare needs.
Turning to occupancy-related numbers, one-third (33%) of participating organizations reported that their lead volumes had returned to pre-pandemic levels. That figure is up from the 20% that reported increased lead volumes in April.
Approximately 50% of the independent living and / or assisted living respondents reported that the pace of move-ins had accelerated in the past 30 days, a percentage similar to the previous survey. Fewer memory care operators reported an acceleration in move-ins since the previous survey (38% versus 48%).
Similarly, approximately 50% of independent living / assisted living operators reported higher occupancy rates. Notably, more memory care operators saw no change (41%) or a decline (20%) in occupancy rates than those reporting increased occupancy (39%).
Although most occupancy increases were between 0.1 and three percentage points, approximately 20% of assisted living / memory care operators saw occupancy increase three or more percentage points.
When comparing attitudes surrounding development plans, only 15% of operators in Wave 3 (April 13-19, 2020) said they expected their development pipelines to increase, primarily due to projects already underway. The pandemic led to a sharp decrease in new construction lending.
A recently released second-quarter 2021 NIC Lending Trends Report from NIC Analytics shared that newly closed senior living construction loans increased by 46.7% on a same-store, quarter-over-quarter basis — the highest quarterly increase since the fourth quarter of 2017.
That uptick in construction lending is reflected in the Wave 34 survey, which showed that 41% of participating operators now expect their development pipelines to increase. But those expectations may be tempered by challenges in labor and raw materials shortages, as well as higher costs tied to supply chain disruptions, tariffs and rising energy prices, NIC said.
Operating margins continue to be pressured by labor shortages, higher wages, lower occupancy rates and the inability to grow rents. But approximately half of respondents indicated that they expect operating margins to increase, with slightly more operators in the current survey (40%) anticipating smaller increases between 1% and 5%, compared with the previous survey (31%).