Where are senior housing developers building? Look no further than the Sun Belt, the Midwest, and the East Coast.
Dallas, Minneapolis, and Atlanta were busiest for senior housing development over the past year, National Real Estate Investor reported, based on National Investment Center for Seniors Housing and Care (NIC) data.
Here are the top seven cities for growth in senior housing units added to inventory between the first quarters of 2016 and 2017, according to the NIC data:
1. Dallas (1,850 units added, 6.7% growth)
2. Minneapolis (1,840, 7.4%)
3. Atlanta (1,596, 9.7%)
4. Chicago (1,571, 4.2%)
5. Houston (1,156, 6.9%)
6. New York City (1,065, 2.8%)
7. Boston (1,043, 5.3%)
Nationally, the senior housing market is suffering from supply-related pressures. In fact, the industry is currently at its lowest occupancy rate since mid-2013.
The first-quarter 2017 senior housing annual inventory growth rate increased 0.2 percentage points from the fourth quarter of 2016 to 3.4%, which is its fastest pace since at least 2006, NIC data shows.
Despite the growth in supply, demand for senior housing did not keep up, leading to lower occupancy across the U.S., said NIC Chief Economist Beth Burnham Mace.
The average occupancy rate for senior housing properties fell 0.3 percentage points to 89.3% in the first quarter of 2017. Average occupancy was 89.9% in the first quarter of last year.
For context, the occupancy rate for assisted living properties averaged 87.2% during the first quarter of 2017. That’s down from 87.7% in the fourth quarter of 2016. In the first quarter of 2016, the rate was 88.2%.
Senior housing construction starts in the first quarter of 2017 totaled 2,845 units. In the first quarter of last year, construction starts totaled 2,737 units.
Despite these statistics, market dynamics vary significantly from metro to metro, Mace emphasized at the recent NIC Spring Investment Forum in San Diego. For instance, Chicago’s supply and demand have remained largely in balance, while occupancy in Atlanta has dwindled as inventory has increased.
Written by Tim Regan