The seniors housing sector continues to see recovery, with positive rent growth trends and a slightly higher occupancy in fourth quarter of 2011, although construction activity continued to decline, 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 seniors housing properties in the last quarter rose to 88.2%, up 0.1% from the previous quarter, and a 0.7 percentage point increase from a year ago, the data analysis service reports.
For independent living properties, occupancy averaged 88%, 60 basis points beneath the average of 88.6% for assisted living properties. However, the independent living segment was the only one to show improvement from the prior quarter, posting a 0.2 percentage point increase from the third quarter.
Average occupancy for both independent and assisted living are both 1.2% above their respective cyclical lows, says NIC.
“With occupancy continuing to rise, it is clear the recovery is underway, however, independent living has been driving much of the occupancy gains in recent quarters,” Michael Hargrave, vice president of NIC MAP, said in a statement.
Source: NIC MAP
Year-over-year rent growth for seniors housing was boosted 0.1 percentage points to 1.7%, compared to 0.8% in the fourth quarter of 2010.
“While rent growth continues to slowly improve, it is important to note that current rent growth remains below the current level of inflation,” Chuck Harry, NIC’s director of research and analysis, said in a statement.
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Annual absorption was at 2.0% in the fourth quarter, compared to 1.9% in the third quarter and 1.7% during the same period of the previous year. This marks the fifth consecutive quarter where annual absorption outpaces the annual inventory growth, which serves to pressure occupancy, Harry noted.
Seniors housing annual inventory growth rate was 1.2%, better than the previous quarter’s 1.0% but down from 1.5% in the 2010’s fourth quarter, NIC reports. Construction as a share of existing inventory for seniors housing was also down, at 1.5% compared to 1.6% in the third quarter.
Nursing care occupancy rate declined slightly to 88.2%, and NIC says that this segment’s occupancy has been “marginally declining” for several years now. Annual inventory posted negative growth of -0.4% in the quarter, “continuing the established trend of slightly declining inventory growth.”
However, private pay rents for the sector grew 3.4% year-over-year in the quarter, NIC says, keeping pace with third quarter results.
Click here to access the regional quarterly NIC MAP data.
Written by Alyssa Gerace