The senior industry industry closed out 2017 in lackluster fashion, from an occupancy perspective.
After a year that saw historically low senior housing occupancy, numbers remained weak and newly opened units were slow to lease in the fourth quarter, according to the latest data from the National Investment Center for Seniors Housing & Care (NIC), released Thursday.
Overall, senior housing occupancy was 88.8% for the fourth quarter of 2017, which was unchanged from the third quarter.
“It is … notable that the difference between stabilized and total occupancy was wide at 1.5 percentage points, reflecting a large amount of recently opened units that have not yet been leased,” NIC Chief Economist Beth Burnham Mace stated in a press release. “This unfilled inventory adds competitive pressure to the market and puts downward pressure on rate growth.”
Asking annual rent growth in the fourth quarter was 2.6% for senior housing, down 0.1 percentage point from the previous quarter and 3.7% lower on a year-over-year basis.
Meanwhile, labor expense growth, in terms of the annual change in assisted living hourly earnings, hit 5.3% in Q3, according to Bureau of Labor Statistics data cited by NIC.
Softness in assisted living
Breaking down the different types of senior housing, the occupancy rates for both independent living and assisted living were unchanged between third and fourth quarters of 2017. For independent living, it was 90.6%, compared to 86.5% for assisted living.
It appears assisted living is in for continued challenges, given that even more AL units are poised to come online.
“Despite the sustained softness in assisted living occupancy, assisted living properties continue to comprise the majority of the seniors housing units under construction,” said Chuck Harry, NIC’s chief of Research & Analytics, in the press release. “In fact, the seniors housing construction level shares of 61% assisted living and 39% independent living have been quite steady for the last eight quarters dating back to the first quarter of 2016.”
Mace and other NIC experts routinely point out that occupancy and construction trends can vary considerably from market to market, and even within different parts of a single market.
The Mid-Atlantic region had the highest overall Q4 occupancy, at 91.7%, although that was down from 92.5% the previous quarter. The Southwest was the region with the lowest senior housing occupancy in the fourth quarter, at 83.1%—unchanged from Q3.
Written by Tim Mullaney