Senior housing occupancy continued to improve across various property types during the fourth quarter of 2013 while construction activity began to moderate slightly, according to the latest data from the National Investment Center for the Seniors Housing & Care Industry (NIC).
Overall, the average occupancy rate for senior housing properties during the fourth quarter was 89.7%, a growth of 0.4 percentage points compared to the prior quarter and a 0.7 point increase from a year earlier.
Occupancies for independent living, assisted living and nursing care also reported slight increases compared to the previous quarter.
Independent living and assisted living properties averaged occupancy rates of 90% and 89.2%, respectively, translating into gains of 0.5 and 0.1 percentage points when compared to the third quarter of 2013.
Nursing care occupancy during the fourth quarter increased 0.3 percentage points to 87.9%.
Senior housing’s annual asking rent growth remained unchanged, despite the occupancy increases across the various property types.
The rate of annual asking rent growth for the quarter was 1.6%—0.5 percentage points below its pace one year earlier during the fourth quarter of 2012, according to NIC.
The quarter did report a disparity between the rent growths among independent living and assisted living properties, with the former accelerating 20 basis points and the latter slowing by 30 basis points, said Chuck Harry, NIC’s managing director and director of research and analytics.
“While seniors housing rent growth overall remained stables during the quarter, rent growth for independent living strengthened, while assisted living rent growth slowed,” Harry said.
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The fourth quarter also posted annual absorption growth, reporting absorption of 2.2%, compared to 2% during the third quarter of 2013 and 2.3% from a year ago.
While there have been talks in recent months of senior housing construction potentially overheating, activity tempered slightly during the fourth quarter, as construction as a share of existing inventory decreased 0.3 percentage points below the previous quarter to 2.9%.
Tempering construction activity in relation to a decline in construction starts may not signal a larger trend just yet.
“While construction activity during the fourth quarter moderated slightly, in part due to a modest decline in the construction starts, it is far too soon to say if this is a trend or a one-quarter aberration,” Harry said.
Written by Jason Oliva