ANNAPOLIS, Md. — Overall seniors housing occupancy hit a six-year low of 88.3 percent during the first quarter of 2018, with assisted living reaching an all-time low of 85.7 percent, according to the National Investment Center for Seniors Housing & Care (NIC).
Based in Annapolis, NIC is a nonprofit data and analytics organization exclusively serving the seniors housing industry. The occupancy data is based on tracking assisted living and independent living communities in the top 31 U.S. markets.
The overall occupancy rate is still above its cyclical low — 86.9 percent in first-quarter 2010, during the recovery from the Great Recession. The number is buoyed by independent living’s occupancy rate, which was down 60 basis points year over year but still comparatively high at 90.3 percent.
The record-low assisted living occupancy rate represents a drop of 70 basis points from the previous quarter, and an eyebrow-raising drop of 130 basis points year-over-year.
“The quarterly decline in the occupancy rate for assisted living stemmed from a marked slowdown in first-quarter absorption as well as less inventory growth,” says Beth Burnham Mace, chief economist of NIC.
“Winter weather typically causes a slowdown in both inventory growth and demand in the first quarter,” continues Mace. “This year a particularly harsh flu season may have also slowed leasing activity as many properties lost marketing days due to flu-related property-level quarantines. We may potentially see a corresponding bounce back in in the second quarter as delayed move-ins from the first quarter take place.”
Despite the occupancy rate declines, absorption remains at an positive annual rate of 2.1 percent as of the first quarter. This is a slowdown of 20 basis points over the previous quarter and 40 basis points year over year. Inventory growth was identical to the previous quarter at 3.1 percent.
“There remains a wide range of inventory growth rates across the primary markets, as five of the top 31 metropolitan markets alone accounted for 35 percent — more than one-third — of the seniors housing units that came online during the past four quarters,” says Chuck Harry, NIC’s chief of research and analytics. “That represented annual inventory growth rates of 5.5 percent or greater within each of those five markets.”
Preliminary data on construction as a share of existing inventory for seniors housing was 6.7 percent in the first quarter of 2018, 30 basis points below its recent high in the third quarter of 2016.
For more information and the full report, visit http://www.nic.org/nic-map/reports