The average occupancy rate for senior housing properties rose to 88.8% in the third quarter of 2012, up 20 basis points from the previous quarter and a 0.8 percentage point increase from a year ago, according to data from the National Investment Center for the Seniors Housing & Care Industry (NIC).
Occupancy has been rising consistently in the last 10 quarters and is 1.8 percentage points above its cyclical low of 87% in the first quarter of 2010.
Independent living and assisted living occupancy rates both averaged 88.8% in the third quarter of 2012, showing improvements from the prior quarter of 0.1 and 0.2 percentage points, respectively.
“Occupancy is now at a four-year high and, with inventory growth remaining tempered, we should continue to see occupancy recover in the near-term,” said Michael Hargrave, vice president of NIC MAP, in a statement.
The annual inventory growth rate remained flat at 1.3% compared to the previous quarter, and annual absorption fell ten basis points to 2.2% in the third quarter. However, it marks the eight consecutive quarter where the pace of annual absorption is above that of annual inventory growth, according to Chuck Harry, NIC’s director of research and analysis.
Construction as a share of existing inventory for seniors housing went down twenty basis points in the quarter to 2.0%.
“While construction activity declined this quarter, it is more a result of an increase in completions rather than a decrease in construction starts,” Harry said.
Rent growth accelerated as well, growing from 1.9% in the second quarter of 2012 to 2.2% in the third quarter. That represents 0.6 percentage points above the pace of growth by the third quarter of 2011.
“The pace of annual rent growth is now at its highest level since the fourth quarter of 2009 and now above core inflation for the first time since the fourth quarter of 2010,” said Harry.
Occupancy rates for skilled nursing increased slightly to 88%, up 10 basis points from the previous quarter. Skilled nursing occupancy has been marginally declining for years, NIC notes. Annual inventory growth for skilled nursing fell 0.3%, while private pay rents grew 3% year-over-year in the quarter.
Written by Alyssa Gerace