The average occupancy rate for senior housing properties rose to 87.9% during the first quarter of 2011, up 0.2% from the previous quarter according to data from the National Investment Center for the Seniors Housing & Care Industry (NIC). While it’s the fourth consecutive quarter that occupancy rates have improved, the senior housing industry isn’t out of the woods yet.
“Although the improvement in the occupancy rate during the previous four quarters has been nominal, it is clear that occupancy has moved past its cyclical bottom of the first quarter of 2010 and we now are one year into recovery,” says Charles Harry, research director, NIC.
Breaking it down by property types, the Q1 2011 occupancy rate for assisted living properties was unchanged from the previous quarter at 88.4%, while independent living properties rose from 87.3% to 87.7% in the same time period.
Year over year rent growth for senior housing was 0.5% during the first quarter of 2011, up from 0.0% from the same period last year. “Rent growth has been positive throughout the downturn, but this is the first quarter since 1Q07 that the pace of rent growth has accelerated,” said Harry.
Annual inventory growth continues to slow, up only 1.3% during the first quarter of 2011 but down from both 1.6% in the previous quarter and 2.6% in the first quarter of 2010. The pace is the lowest level ever recorded according to NIC.
The lack of construction financing for senior housing developments continues to have a impact. Construction activity for senior housing remains unchanged from the previous quarter at 1.8% of existing inventory. Although it has been trending between 1.8% and 2.1% during the past year, the number of units under construction as of the first quarter 2011 is down 57% from its cyclical peak in the first quarter of 2008.
“The general scarcity of available construction financing has reduced construction levels and now the pace of inventory growth. As a result, increases in demand (absorption) generally are exceeding the pace of new supply, which is leading to gradual improvements in occupancy rates and allowing the industry to gain traction towards recovery,” said Hargrave.