Occupancy Holds Steady at “Relatively Weak” 88.8% in Q4, According to NIC

by Jeff Shaw

ANNAPOLIS, Md. — The occupancy rate for seniors housing properties averaged 88.8 percent in the fourth quarter of 2017, unchanged from the prior quarter and down 0.7 percentage points from year-earlier levels, according to the National Investment Center for Seniors Housing and Care (NIC).

Based in Annapolis, NIC is a nonprofit entity that tracks metrics on the seniors housing industry.

The fourth-quarter numbers place occupancy 1.8 percentage points above its cyclical low of 87 percent reached during the first quarter of 2010 and 1.4 percentage point below its most recent high of 90.2 percent in the fourth quarter of 2014.

Independent living continues to have the strongest occupancy rate, at 90.6 percent, compared with 86.5 percent for assisted living. The occupancy rate for independent living was unchanged from the prior quarter and down 0.5 percentage points from year-earlier levels. The occupancy rate for assisted living was also unchanged from the third quarter, but down 1 percentage point from year-earlier levels.

Absorption rates also held steady from third-quarter to fourth-quarter 2017, remaining at 2.4 percent across the industry. This is a 0.1 percentage-point drop, year over year. This is partially due to a slow in inventory growth, which at 3.2 percent was down 0.2 percentage points from the third quarter to the fourth.

“The occupancy rate for seniors housing was unchanged in the fourth quarter, but remained relatively weak at 88.8%, as inventory growth continues to outpace demand,” sasys Beth Burnham Mace, chief economist of NIC.

“It is also notable that the difference between stabilized and total occupancy was wide at 1.5 percentage points, reflecting a large amount of recently opened units that have not yet been leased,” continues Mace. “This unfilled inventory adds competitive pressure to the market and puts downward pressure on rate growth.”

For the complete report, including construction rates and rent levels, click here

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