Assisted living occupancy falls to lowest level since 2010
Occupancy for assisted living in the first quarter of 2017 averaged 87.2%, its lowest level since early 2010, according to data released Wednesday by the National Investment Center for Seniors Housing & Care's MAP Data Service.
Overall, occupancy for seniors housing properties — independent living and assisted living — in the first quarter of this year averaged 89.3% as net additions to inventory outpaced absorption of units. That's the lowest level since mid-2013, NIC said.
The rate represented a decrease of 0.3 percentage points from the previous quarter and was down 0.6 percentage points from year-earlier levels.
As of the first quarter of this year, seniors housing occupancy was 2.4 percentage points above its cyclical low of 86.9% during the first quarter of 2010 and 0.9 percentage points below its most recent high of 90.2% in the fourth quarter of 2014.
Independent living fared better than assisted living, with an occupancy rate averaging 90.9% during the first quarter, although this rate was down 0.2 percentage points from the previous quarter and down 0.3 percentage points from year-earlier levels.
Inventory. The seniors housing annual inventory growth rate in the first quarter of the year was 3.4%, up 0.2 percentage points from the previous quarter and at its fastest pace since at least 2006.
“It was another active quarter for inventory growth, with nearly 4,800 units added to the seniors housing stock in NIC MAP's 31 primary markets,” said Beth Burnham Mace, chief economist for NIC. “At the same time, demand slowed during the quarter, as is typically the case in the first quarter due to the seasonal effects of the winter months. Some of the slowdown in net absorption may also reflect the severity of the 2016-2017 flu season as reported by the Centers for Disease Control [and Prevention].”
Construction. Construction as a share of existing inventory for seniors housing slowed 0.3 percentage points from the previous quarter to 5.8% and was 0.7 percentage points below its recent high of 6.5% in the third quarter of 2016. Seniors housing construction starts during the first quarter of 2017 preliminarily totaled 2,845 units, which included 1,388 independent living units and 1,457 assisted living units.
On a preliminary four-quarter basis, starts totaled 18,366 units. Construction starts data typically are revised upward retrospectively in subsequent quarters as additional starts are identified.
Rent. During the first quarter of the year, the average rate of seniors housing's annual asking rent growth was 3.3%, down 0.4 percentage points from the previous quarter but up from 3.1% in the first quarter of 2016.
For comparison purposes, inflation as measured by the consumer price index was up 2.8% in February from year-earlier levels.
“Considering the continued strong inventory growth and sustained levels of construction, this solid same-store rent growth is notable,” noted Chuck Harry, NIC's chief of research and analytics. “From year-earlier levels, it was fastest for independent living properties, whose asking rents increased by 3.5%, compared to the 3% gain seen in assisted living properties. Both first quarter growth rates, however, were below their respective pace of growth during the latter half of 2016.”