Though still not healthy, assisted living occupancy has improved slightly from historic lows.
The occupancy rate for assisted living properties averaged 86.6% during the third quarter of 2017, which is 0.2 percentage points higher than the 86.5% average assisted living occupancy recorded in the second quarter of 2017. At the time, the 86.5% figure represented a record low, according to NIC.
This slight occupancy uptick doesn’t necessarily represent a larger pattern, according to NIC Chief Economist Beth Burnham Mace.
“I wouldn’t overreact too much in one quarter. It was nice that we saw an improvement in occupancy, but it’s still very low by historical standards,” Mace told Senior Housing News. “We’ll wait to see next quarter how things play out.”
The boost in occupancy may be due to slower inventory growth and continued strong absorption, she added.
“Assisted living inventory grew by a preliminary 1.1% in the third quarter, less than half the record pace we saw the prior quarter, while net absorption of units remained strong on the heels of last quarter’s record quarterly increase,” Mace said in a press release. “Nevertheless, assisted living occupancy remained low in the third quarter at only 86.6%, showing the effects of inventory growth exceeding demand for nine of the past 12 quarters.”
Occupancy static overall
The occupancy rate for independent living properties, meanwhile, averaged 90.5% during the third quarter of 2017. This represents a 0.1 percentage point drop from the second quarter of 2017 and a 0.6 percentage point drop from the third quarter of 2016.
The average occupancy rate for senior housing properties during the third quarter of 2017 remained unchanged from the second quarter of 2017 at 88.8%.
As of the third quarter of this year, senior housing annual absorption was 3.2%, or unchanged from the second quarter of this year. Still, annual absorption increased 0.6 percentage points from one year earlier, and remained the quickest pace since NIC started reporting the data in 2006.
Inventory growth steady
The senior housing annual inventory growth rate in the third quarter of this year was 4.1%, falling 0.1 percentage point from the second quarter, when it also hit its fastest pace since 2006.
In the third quarter of 2017, current construction as a share of existing inventory for senior housing preliminary remained unchanged from the previous quarter at 6.1%, and was 0.5 percentage points below the recent peak of 6.6%, which was recorded during the third quarter of last year.
Meanwhile, the average rate of senior housing’s annual asking rent growth was 2.7% in the third quarter of 2017, representing a drop of 0.7 percentage points from the second quarter of this year and down from the 3.8% recorded in the third quarter of last year.
“The sustained competitive market conditions across the metropolitan markets likely contributed to the deceleration in the same-store asking rent growth,” Chuck Harry, NIC’s chief of research & analytics, explained in the press release. “While many markets are still in the process of absorbing the units that came online over the past couple of years, the construction pipeline remains at elevated levels even though it too is no longer accelerating.”
Written by Mary Kate Nelson
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