Seniors housing under construction remains flat despite a rise in new starts in 2011, says the annual Seniors Housing Construction Trends Report, released at the National Investment Center for the Seniors Housing & Care Industry (NIC) conference in September.
While seniors housing and care construction starts in the top 100 U.S. metro markets have increased year-over-year, the total number of units under construction remained relatively flat, the report states.
“The findings in this year’s report are consistent with the continued lack of construction financing available to our sector, although we do see financing beginning to loosen up somewhat,” said Robert Kramer, president of NIC in a statement. “We’re starting to see regional banks, traditionally the main source of construction financing for seniors housing and care, become more active, though levels are far from what the sector experienced prior to the recession.”
The economic downturn led to a 36.9% decrease in seniors housing and care starts from its pre-recession level in 2007-2008, Kramer noted. There were 14,942 starts in the past year compared with 23,685 starts pre-recession.
For units under construction across sectors, independent living properties saw a year-over-year decrease while nursing care and assisted living facilities under construction saw a slight uptick.
NIC pointed to metropolitan market rankings by net growth in inventory over the previous five-year period as a widely-referenced section of the report. Regionally, Chicago saw a net increase in assisted living inventory of more than 43% while Dallas and Boston saw the largest percentage increase in independent living inventory, rising 28.2% and 27.6% respectively, Kramer noted.
“Despite an uptick in the number of construction starts, the trailing twelve month starts as a percentage of existing inventory, at 1.1%, is below the current pace of annual absorption (i.e. the change in the number of occupied units from a year ago), at 1.6%,” added Charles Harry, director of research & analysis at NIC. “This suggests there will be some upward pressure on occupancies going forward.”
Written by Elizabeth Ecker