ANNAPOLIS, Md. — Private-pay seniors housing occupancy fell 260 basis points in the third quarter of 2020, from 84.7 percent to 82.1 percent, indicating a steady decline since the outbreak of the novel coronavirus. This is the second quarter in a row where occupancy fell more than 250 basis points, meaning the seniors housing sector is now experiencing its largest drop in occupancy on record.
That’s according to new data from the National Investment Center for Seniors Housing & Care (NIC), an Annapolis-based nonprofit firm that tracks industry data gathered from 31 primary metropolitan markets.
The declines are exacerbated by the fact that independent living facilities saw a considerable increase in inventory, posting the largest increase since early 2009.
“This reflects the relatively robust lending and development environment of 18 to 24 months ago that supported construction starts back then and which now are completed properties entering the market,” says Chuck Harry, NIC’s chief operating officer. “Construction starts activity in the third quarter continued to be relatively weak, reflecting today’s more constrained capital markets.”
Meanwhile there are large disparities between occupancy rates across metro areas and properties. San Jose (89.9 percent), San Francisco (87 percent) and Portland, Oregon (85.5 percent) had the highest occupancy rates, while Houston (75.9 percent), Atlanta (77.4 percent) and Phoenix (78.6 percent) recorded the lowest. The occupancy rate in the Sacramento area fell 860 basis points since the beginning of the pandemic to 80.6 percent in the third quarter, while the Washington, D.C. area saw a smaller 2220-basis-point point drop to 84.7 percent.
“What we’re seeing is a barbell effect, where 34 percent of seniors housing properties in the NIC MAP Primary Markets reported occupancies above 90 percent in the third quarter, while 36 percent reported occupancies below 80 percent,” says Beth Burnham Mace, NIC’s chief economist. “The operators with higher occupancy rates will be able to take on the stress of COVID-19, while those with lower occupancy rates will be more challenged.”
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