Demand for senior living has continued to exceed the rate of new community openings in 2024, a trend that could lead to increasingly tight availability for such services down the road.
According to the latest NIC MAP Vision occupancy report, released Oct. 3, the occupancy rate across the 31 primary markets that NIC MAP tracks increased 0.7 percentage points to 86.5% in the third quarter of 2024, up from 85.8% the previous quarter.
Boston, Baltimore and Tampa had the highest occupancy rates out of the primary markets at 91.3%, 89.2% and 89.2% respectively. Atlanta, Houston and Las Vegas were the lowest at 83.7%, 82.1% and 79.2% respectively.
The report also indicates the number of occupied senior living units reached a new high in the quarter, with 611,000 across the 31 primary markets.
Caroline Clapp, senior principal at the National Investment Center of Seniors Housing and Care (NIC) said both independent living and assisted living occupancy have steadily grown over the past 13 months. The property types added 0.5 percentage points and 0.9 percentage points of occupancy respectively in the third quarter of 2024.
“The more needs-based product has been outpacing independent living demand, but they’ve both been really steady, which has been quite notable,” Clapp told Senior Housing News.
Clapp added based on current occupancy trends, the industry is on pace to reach pre-pandemic levels before the end of the year.
However, while occupancy has been on the rise, development is still slow. In the third quarter of 2024, the number of construction projects compared to total inventory registered only 1.1% higher than it was in the third quarter of 2023. That represents the lowest amount of construction the senior living industry has seen in a decade, Clapp said. Construction starts over the past four quarters are comparable to the levels seen in 2009 following the housing crisis, with 7,100 new units built in that time.
“The industry does not have enough senior housing options in the development pipeline to meet the growing demand from older adults, so construction needs to ramp up in a smart and measured way or we’ll have a crisis on our hands,” Arick Morton, CEO of NIC MAP Vision, said in the release. “Data will help determine which markets are ripe for expansion, where demand is highest, and the kinds of communities older adults are looking for.”
The recent Fed rate cut could provide some relief for new development starts, especially when things are more stable. According to Clapp, it appears the Fed has indicated it is done raising rates for the time being and additional cuts are expected in the coming quarters.
“When you combine that with the consistent improvement and occupancy rates, that should also provide a level of comfort to underwriters and developers,” Clapp said. “You’re not seeing a lot of volatility in the industry right now. It’s just steady improvement.”
Companies featured in this article:
National Investment Center for Seniors Housing & Care, NIC MAP Vision