Senior housing occupancy has grown for the third consecutive quarter since the pandemic began,, according to new occupancy data from the National Investment Center for Seniors Housing & Care (NIC).
Occupancy in 31 NIC MAP primary markets inched up 0.2% in the first quarter of 2022 compared to the fourth quarter of last year, representing a 2.5% increase from a pandemic low of 78% in the second quarter of 2021. While occupancy grew at a slower rate in 1Q22 than in the second half of 2021, the latest increase is still good news for the industry, according to NIC Chief Economist Beth Mace.
“The report continues to show recovery,” Mace said. “The industry held its own, and that was good.”
The latest increase in occupancy also is a testament to the success of the Covid-19 vaccines and how operators adapted to protect residents as Omicron wreaked havoc earlier this year.
“Had we not had the vaccine or the expertise of our operators today, we probably would have seen a decline in occupancy,” Mace said.
At the same time, annual rental resident rates climbed 4.1% for the assisted living segment in the first quarter of 2022, representing the largest increase in rates since NIC MAP Vision began reporting the data in 2005. Annual rental rate growth for the independent living segment was 2.7%.
Still, Mace struck a tone of cautious optimism, and urged operators and developers to monitor consumer confidence.
“There is a lot on residents’ minds and consumers’ minds right now,” Mace said. “That has an impact on people’s desire to move from their homes into senior housing.”
Not all senior housing types saw occupancy gains in the first quarter of 2022, either. Although occupancy at assisted living properties grew 0.5%, registering at 77.9% during the period; independent living occupancy slipped 0.1% to land at 83.1% in 1Q2022.
Growth of new senior housing inventory exceeded growth in demand for independent living communities, which stymied occupancy gains for the property type. Meanwhile, growth in inventory was eclipsed by growth in demand for more needs-based settings — such as assisted living — driving census gains.
Additionally, NIC noted a slowdown in inventory growth, and stability in new construction starts, which “bodes well for being a tailwind for further occupancy growth going forward,” Mace added.
Inventory growth in the first quarter was the weakest since 2013, registering at about 2,000 units in primary markets, according to Mace.
“That’s really a reflection of the impact of the pandemic on development pipelines in 2020,” Mace said.
Although construction is down across the country, it is ramping up in Dallas, Texas, Miami, Florida and Portland, Oregon. Should those trends continue, that could contribute to oversupply conditions and hurt occupancy in the future.
“Those markets that have more construction underway as a share of inventory than they did last year or the year before,” Mace continued. “That being said, we’re not at the near levels of inventory growth we had a few years ago.”
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