Seniors housing continues recovery; construction still on decline
The seniors housing occupancy rate continued its recovery in the third quarter of 2011, while overall construction activity continued to decline, according to NIC MAP, a data analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC).
The average occupancy rate for seniors housing property in 3Q11 was 88.1 percent, an increase of 0.2 percentage points over the prior quarter. The seniors housing average occupancy rate has risen in six consecutive quarters and is 1.0 percentage points above its cyclical low of 87.1 percent in the 1Q10.
The occupancy rate for independent living properties in 3Q11 averaged 87.9 percent, and the occupancy rate for assisted living properties averaged 88.6 percent. Both property types showed improvement from 2Q11 occupancy rates of 87.5 percent and 88.5 percent, respectively. The average occupancy rates for independent living and assisted living are now 1.0 and 1.1 percentage points, respectively, above their cyclical lows. “With occupancy rising each quarter since 1Q10, it is clear we are past the bottom and are clearly in the recovery stage,” says Michael Hargrave, vice president, NIC MAP.
Year-over year rent growth for seniors housing increased to 1.6 percent, from 1.5 percent in 2Q11 and 1.2 percent in 3Q10. “This is the highest pace of rent growth we have seen since 1Q10,” says Chuck Harry, NIC’s director of research and analysis.
The nursing care occupancy rate remains stable at 88.3 percent in 3Q11, unchanged from 2Q11. This stability in occupancy has been reported since 2Q10 in the sector.
Nursing care annual inventory growth was -0.3 percent in 3Q11, illustrating the trend of slightly declining inventory growth. Private pay rents for the sector grew 3.4 percent year-over-year this quarter, which is a slight increase from the 3.3 percent pace reported in the second quarter of 2011.