Senior housing construction activity continued to decline in the third quarter of 2011, but occupancy rates continued to recover according to NIC MAP, a data analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC).
The average occupancy rate for senior housing properties was 88.1% during the quarter, up 0.2% from the prior quarter. The seniors housing average occupancy rate has risen in six consecutive quarters and is 1.0 percentage points above its cyclical low of 87.1% in 1Q10.
The occupancy rate for independent living properties in 3Q11 averaged 87.9%, and the occupancy rate for assisted living properties averaged 88.6%. Both property types showed improvement from the 2Q11 occupancy rates of 87.5% and 88.5%, respectively. The average occupancy rates for independent living and assisted living are now 1.0 and 1.1 percentage points, respectively, above their cyclical lows.
“With occupancy rising each quarter since 1Q10, it is clear we are past the bottom and are clearly in the recovery stage,” says Michael Hargrave, vice president – NIC MAP.
Year-over-year rent growth for seniors housing increased to 1.6%, from 1.5% in 2Q11 and 1.2% in the third quarter of 2010. “This is the highest pace of rent growth we have seen since 1Q10,” says Chuck Harry, NIC’s director of research and analysis.
The annual absorption increased to 1.9% during the third quarter, making it the fourth consecutive quarter where the pace of annual absorption is above that of annual inventory growth.
“Thereby applying upward pressure on occupancy,” says Harry.
In 3Q11, the seniors housing annual inventory growth rate was 1.0%, which is down from 1.1% in 2Q11 and 1.9% in 3Q10. This is the lowest level seen in the current market cycle. The construction vs. inventory level for seniors housing was 1.5%, which is down from 1.8% in the previous quarter.
The nursing care occupancy rate remains stable at 88.3% in 3Q11, unchanged from 2Q11. This stability in occupancy has been reported since 2Q10 in this sector.
Nursing care annual inventory growth was -0.3% in 3Q11, illustrating the established trend of slightly declining inventory growth. Private pay rents for the sector grew 3.4% year-over-year this quarter, which is a slight increase from the 3.3% pace reported in the second quarter of 2011.
Written by John Yedinak