The senior living industry’s average occupancy rate ticked up again in the second quarter of the year, and is now approaching levels last seen in 2020.
That’s according to the latest occupancy report from NIC MAP Vision. According to the report, released July 11, operators in the 31 primary markets that NIC MAP tracks reached an average occupancy rate of 85.9% in the second quarter of 2024, an increase of 50 basis points from the first quarter of the year. The latest results represent 12 consecutive quarters of occupancy gain for the industry.
The industry is approaching peak occupancy levels last seen in 2020, before the Covid-19 pandemic disrupted life across the world. Assisted living occupancy registered at 84.3%, which NIC noted is just 10 basis points from the product type’s peak levels in 2020; while independent living registered at 87.6%, which is just 200 basis points from its prior peak in 2020 of 89.6%.
Independent living occupancy grew slightly faster than assisted living occupancy between the first and second quarters of the year, according to NIC.
The industry’s high current demand and lower rates of new supply should continue to nudge occupancy up in the rest of the year, according to Lisa McCracken, head of research and analytics at the National Investment Center for Seniors Housing and Care (NIC).
“We are confident in saying that we project occupancy to continue to increase through the end of the year. The third and fourth quarters of the year have revealed healthy demand the past few years, so we expect that to continue,” McCracken told Senior Housing News.
Among primary markets, Boston, Tampa and Baltimore had the highest occupancy rates at 90.6%, 88.8% and 88.8%, respectively; while Houston, Las Vegas and Miami were the lowest with occupancy rates of 80.9%, 81.1% and 82.6%, respectively.
The number of occupied senior housing units reached a record in the second quarter at 606,968 units, representing a 4.4% increase in the number of occupied units compared to the second quarter of 2023. The number of occupied units also grew 6,200 between the first and second quarter of 2024.
Inventory growth registered at 2,600 new units in the second quarter, or a 1.5% increase compared to the same period in 2023. At the same time, the senior living industry has the lowest number of units under construction seen since the third quarter of 2014 and the lowest number of new construction starts seen since the 2009 financial crisis, with only 900 new starts reported in the second quarter of 2024.
The inability of senior living companies to get construction financing, along with the cost of that capital, are still big barriers to new construction in senior living, McCracken said.
A previous NIC report noted that senior living companies must develop new communities 3.5 times faster than they are now to meet demand by 2030.
“The high interest rate environment is putting a damper on new construction activity as well as the ability to even obtain construction financing,” she said. “There are organizations who are continuing to develop, but the numbers are way down from several years ago. We will need to see some rate reductions before the spigot really starts to open up in a meaningful way.”
Companies featured in this article:
National Investment Center for Senior Housing & Care, NIC MAP Vision