Senior housing and care construction activity gained traction during the second quarter of 2012, while occupancy rates continued to recover and year-over-year rent growth accelerated, according to NIC MAP, the data and analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC).
Senior Housing Construction & Absorption
The annual inventory growth rate for senior housing increased slightly to 1.3% in the second quarter, ten basis points above the previous quarter and 20 basis points higher than the same period in 2011.
Current construction as a share of existing inventory for seniors housing remained flat at 2.1%.
“This stabilization in construction activity hints that we may be at the beginning of a new phase in the development cycle,” said Chuck Harry, director of research and analysis at NIC.
Annual absorption for senior housing properties was at 2.3% in the second quarter, compared to 2.1% in the first quarter of 2012 and 1.7% a year earlier.
“This is now the seventh consecutive quarter where the pace of annual absorption is above that of annual inventory growth, reflecting both solid demand and recently tempered levels of construction,” said Harry.
Senior Housing Occupancy & Rent Growth
Occupancy for senior housing properties rose 30 basis points from the first quarter to 88.6% in the second, and increased 90 basis points from the same quarter in 2011.
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The senior housing average occupancy rate has risen consistently during the past nine quarters, notes NIC, and is 1.6 percentage points above its cyclical low of 87% in the first quarter of 2010.
Both independent living and assisted living occupancies improved from the prior quarter. Independent living’s average occupancy rate rose 20 basis points to 88.5%, while assisted living properties averaged 88.7% for a 30 basis point improvement.
“Occupancy is now at a four-year high, and the supply-demand fundamentals suggest that the recovery will continue in the near-term,” said Michael Hargrave, vice president of NIC MAP.
Annual rent growth for seniors housing accelerated to 1.9%, up from the first quarter’s 1.2%, says NIC, which says that the pace of annual rent growth is now at its highest level since the fourth quarter of 2009.
Skilled Nursing Occupancy & Rent Growth
Skilled nursing occupancy was at 87.9%, a 30 basis point decrease from the previous quarter and in keeping with the trend of “marginally declining” skilled nursing occupancy that has been going on for the past few years.
Annual inventory growth for nursing care properties went down 0.3% in the quarter, in keeping with trends of declining inventory, says NIC. Private pay rents for the sector grew 3.1% year-over-year in the second quarter, 10 basis points above the pace reported in the first quarter.
Written by Alyssa Gerace