Despite modest gains in seniors housing occupancy rates in the first quarter of 2012, construction activity and year-over-year rent growth have slowed, according to the National Investment Center for the Seniors Housing & Care Industry’s data analysis service NIC MAP.
By the end of Q1, the average occupancy rate had risen to 88.4%, up 20 basis points from the previous quarter and an 80-basis point boost from the year before. Overall, seniors housing average occupancy has risen consistently in the past eight quarters, says NIC, and is 1.3 percentage points above 2010’s first quarter cyclical low of 87.1%.
Assisted living occupancy is slightly higher than for independent living, although both sectors showed improvements from the previous quarter. On the assisted living side, occupancy went from 88.4% to 88.6%. Independent living rose from 88% to 88.3%.
“With occupancy continuing to rise, it appears the pace of the recovery remains slow but steady,” said Michael Hargrave, vice president, NIC MAP, in a statement.
However, annual rent growth for seniors housing dropped to 1.2%, compared to the fourth quarter of 2011’s 1.6%; the rate remained flat compared to one year ago.
“The slowdown in the pace of annual rent growth speaks to the challenges that a number of operators have been experiencing in achieving rental rate increases,” Chuck Harry, NIC’s director of research and analysis, said in a statement.
A recent study on residents’ financial situations revealed rising costs of independent and assisted living as a major factor for a resident to leave a community.
Annual absorption of seniors housing properties crept slightly upward to 2.1% in the first quarter of 2012, compared to 2% in the previous quarter and 1.9% in 1Q11.
The annual inventory growth rate remained flat at 1.2%, unchanged from both the 4Q11 and a year earlier. Meanwhile, current construction as a share of existing inventory for seniors housing dropped to 1.5% from the previous quarter’s 1.8%.
For skilled nursing care, occupancy stayed the same at 88.2%. Nursing care experienced negative annual inventory growth of -0.3% in the first quarter, which NIC says continues an “established trend of slightly declining inventory growth.” And while private-pay rents for the sector grew 3% year-over-year in the first quarter, NIC says, this is a slower rate than the 3.4% pace reported last quarter.
Access the quarterly NIC MAP data for regional metro markets here.
Written by Alyssa Gerace