October 10, 2014 |

Seniors housing demand up, construction down, NIC MAP says

Overall, the average occupancy rate for seniors housing properties in the third quarter of this year was 90.3 percent, an increase of 0.4 percentage points from the second quarter and a 1 percentage point increase from a year earlier. As of the third quarter, occupancy was 3.4 percentage points above its cyclical low of 86.9 percent during the first quarter of 2010, according to the National Investment Center for Seniors Housing and Care (NIC) MAP Data Service.

Occupancy rates

The occupancy rate for independent living averaged 90.9 percent during the third quarter, an increase of 0.4 percentage points compared with the second quarter. The occupancy rate for independent living is now 4.2 percentage points above its cyclical low.

The occupancy rate for assisted living properties averaged 89.4 percent during the third quarter, an increase of 0.5 percentage points compared with the second quarter. The occupancy rate for assisted living is 2.9 percentage points above its respective cyclical low.

The nursing care occupancy rate was unchanged at 88.3 percent in the third quarter.

Rent, absorption, inventory growth

During the third quarter, the rate of seniors housing’s annual asking rent growth accelerated to 2.3 percent from 2 percent in the previous quarter and was 0.7 percentage points above its pace one year earlier during the third quarter of 2013.

Private pay rents for the nursing care sector grew 2.8 percent year-over-year this quarter, which is 0.1 percentage points above the pace of the previous quarter.

“This is good news for the sector and follows the positive news we have been hearing about the national economy and the improving labor markets,” says Beth Mace, NIC’s chief economist. She noted that ”stronger job growth, growing consumer confidence and the broad recovery in the stock market are contributing to the gains seen in occupancy and rent growth in seniors housing in the third quarter."

Seniors housing annual absorption was 2.9 percent as of the third quarter, compared with 2.6 percent during the second quarter of this year and 2 percent during the third quarter of 2013.

In the third quarter of 2014, the seniors housing annual inventory growth rate was 1.7 percent, an increase of 0.2 percentage points from the previous quarter. Current construction as a share of existing inventory for seniors housing was 3.4 percent, which is 0.1 percentage points below that of the previous quarter.

Nursing care annual inventory growth was essentially flat in the third quarter of 2014, whereas annual absorption was 0.8 percent.

“While seniors housing’s moderate rate of inventory growth continued during the third quarter, with approximately 2,600 units coming online in the primary markets, the rise in demand was almost twice that rate,” says Chuck Harry, NIC’s managing director and director of research and analytics. “The primary markets realized record absorption during the quarter, as the number of occupied seniors housing units increased by nearly 5,000—the highest rate of absorption in one quarter since the NIC MAP time series began as of year-end 2005.”

Seniors housing and care, through August 2014, registered $11 billion in closed transactions volume, up 28 percent from this time last year. This occurrence reflects the Brookdale Senior Living acquisition of Emeritus Corp., according to NIC MAP.

Pricing for seniors housing and care continues to remain high, at approximately $160,000 per unit, and nursing care pricing continues to hover around $70,000 per unit.

NIC MAP data for the third quarter of 2013

NIC MAP in 2005

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