Occupancy Rates Ticked Slightly Upward to 88 Percent in Fourth-Quarter 2019

ANNAPOLIS, Md. — Private-pay seniors housing occupancy increased 10 basis points in the fourth quarter of 2019 to 88 percent, according to new data from the National Investment Center for Seniors Housing & Care (NIC). The increase is the second consecutive quarterly increase of 10 basis points following an eight-year low of 87.8 percent in second-quarter 2019.

Based in Annapolis, NIC is a nonprofit data firm serving the seniors housing industry. Its data is gathered from more than 15,000 seniors housing properties in 140 U.S. markets.

In a breakout of senior housing types, assisted living occupancy increased to 85.7 percent in the fourth quarter, from a recent record low of 85.1 percent earlier in the year as demand outpaced new inventory growth. The occupancy rate for independent living decreased to 90 percent in the fourth quarter, below its recent peak of 90.4 percent in the first quarter of 2019 and down from 90.3 percent one year earlier.

“It appears that 2019 was an inflection year for assisted living with the occupancy rate at its highest level in two years after having reached its trough and new construction continuing to slow,” says Chuck Harry, head of research and analytics at NIC.

For the year, net absorption totaled 15,643 units for senior housing, the most units demanded on a net basis for a full year since NIC began reporting the data in 2006. Inventory growth decelerated from 21,479 units in 2018 to 16,750 units in 2019, but was nevertheless stronger than net demand.

“Demand was strong, but simply not strong enough to offset the growth in inventory,” says Beth Burnham Mace, NIC’s chief economist. “The slowdown in starts and in the number of units under construction suggest an improving outlook for seniors housing, especially for assisted living.”

NIC’s Primary Markets saw 17,718 new construction starts in the last four quarters, the fewest new starts since 2014. These construction starts amounted to 2.8 percent of total existing senior housing inventory, down from 3.8 percent a year ago and 4.6 percent in early 2018.

NIC data also reveal that continuing care retirement communities (CCRCs), which offer multiple types of care by a single provider on one campus, reported higher occupancy rates than non-CCRC properties in the fourth quarter of 2019 (91.2 percent vs. 86.3 percent). Part of the explanation can be traced to lower inventory growth for CCRCs than for non-CCRC properties, according to NIC.

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