There are 25,340 independent living and assisted living units underway in the top 10 U.S. senior housing construction markets, according to a new report from real estate investment and brokerage services firm Marcus & Millichap.
The Calabasas, California-based firm analyzed data from the National Investment Center for Seniors Housing & Care (NIC) to determine its findings. The top 10 markets in terms of most total units under construction are:
- New York City — 3,768 units
- Dallas-Ft. Worth — 3,222 units
- Atlanta — 3,077 units
- Phoenix — 2,892 units
- Chicago — 2,568 units
- Washington, D.C. — 2,140 units
- Philadelphia — 2,023 units
- Los Angeles — 1,945 units
- Minneapolis-St. Paul — 1,880 units
- Houston — 1,825 units
Overall, there has been overbuilding in certain areas across the country in recent years, leading to a supply/demand imbalance reflected in historically low occupancy rates on a national basis. However, certain markets have fared better than others, and even within metro areas with a lot of construction, some sub-markets have presented good opportunities for new development.
Atlanta had 15.1% of its inventory under construction in Q1 2019, the most among the 31 primary markets tracked by NIC. The extended construction growth has not impacted occupancy. Atlanta’s occupancy was at 87.3% in the second quarter, according to Marcus & Millichap’s report.
NIC also considers Houston to be a high-growth market, a belief backed by Marcus & Millichap’s analysis. Although Houston’s 83.9% Q2 occupancy was the lowest among the top 10, its average annual 10-year population growth for the 65-plus demographic is 4.5%, behind Phoenix (5.5%) and Dallas-Ft. Worth (4.5%).
New York City’s construction numbers can be attributed to the growing demand for high-rise senior living in Manhattan, epitomized by projects from Welltower (NYSE: WELL), Related Cos. and Maplewood Senior Living.
New York’s 93% occupancy rate was tops among the markets listed.