Assisted living occupancy inches up in third quarter
Occupancy in assisted living communities averaged 86.6% during the third quarter, up 0.2 percentage point from the second quarter, when it had fallen to its lowest point ever for the second time in 11 years, according to data released Wednesday by the National Investment Center for Seniors Housing & Care's MAP Data Service.
The rate was down 1.2 percentage point from a year earlier.
Overall, the occupancy rate for senior living properties averaged 88.8% in the third quarter, unchanged from the previous quarter. The level was down 0.9 percentage points from a year earlier; 1.9 percentage points above its cyclical low of 86.9%, reached during the first quarter of 2010; and 1.4 percentage points below its most recent high of 90.2% in the fourth quarter of 2014.
In independent living, the occupancy rate averaged 90.5% during the third quarter of 2017, down 0.1 percentage points from the previous quarter and down 0.6 percentage points from year-earlier levels.
Other statistics for the third quarter, according to NIC:
Absorption. Seniors housing annual absorption was 3.2% as of the third quarter of 2017, unchanged from the second quarter of 2017 and up 0.6 percentage points from one year earlier, and it remained on the fastest pace since NIC began reporting the data in 2006.
Inventory growth. The seniors housing annual inventory growth rate in the third quarter of 2017 was 4.1%, down 0.1 percentage point from the second quarter, when it had reached its fastest pace since NIC began reporting the data in 2006.
“Assisted living inventory grew by a preliminary 1.1% in the third quarter, less than half the record pace we saw the prior quarter, while net absorption of units remained strong on the heels of last quarter's record quarterly increase,” Beth Burnham Mace, chief economist of NIC, said in a statement. “Nevertheless, assisted living occupancy remained low in the third quarter, at only 86.6%, showing the effects of inventory growth exceeding demand for nine of the past 12 quarters.”
Construction. Current construction as a share of existing inventory for seniors housing preliminarily was unchanged from the previous quarter, at 6.1%, and was 0.5 percentage points below its recent high of 6.6% in the third quarter of 2016.
“While many markets are still in the process of absorbing the units that came online over the past couple of years, the construction pipeline remains at elevated levels even though it, too, is no longer accelerating,” Chuck Harry, NIC's chief of research and analytics, said in a statement.
Seniors housing construction starts within the 31 primary markets tracked by NIC during the third quarter of 2017 preliminarily totaled 4,731 units, which included 1,851 independent living units and 2,880 assisted living units. On a preliminary four-quarter basis, starts totaled 18,348 units. Construction starts data often are revised retrospectively in subsequent quarters as additional information becomes available.
Rent. The average rate of seniors housing's annual asking rent growth was 2.7% during the third quarter, down 0.7 percentage points from the previous quarter and down from 3.8% in the third quarter of 2016. By comparison, NIC pointed out, labor expense growth as measured by the annual change in assisted living average hourly earnings was 5.5% in the second quarter, according to the Bureau of Labor Statistics.
“The sustained competitive market conditions across the metropolitan markets likely contributed to the deceleration in the same store asking rent growth,” Harry said.