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 Occupancy Rates For Seniors Housing Remain Steady: NIC Report

​A new report by the National Investment Center for Seniors Housing & Care (NIC) said the occupancy rate for seniors housing in the fourth quarter of 2016 averaged 89.6 percent, with net additions in inventory running ahead of the absorption of units.

The latest measure marks a slight 0.1 percentage point decline from the third quarter of 2016 and down a slight 0.5 percentage point from year-ago levels. “During the past four years, occupancy has averaged 89.7 percent,” NIC said. “As of the fourth quarter of 2016, occupancy was 2.7 percentage points above its cyclical low of 86.9 percent during the first quarter of 2010 and 0.7 percentage point below its most recent high of 90.3 percent in the fourth quarter of 2014.”

The skilled nursing care center occupancy rate was steady at 86.8 percent during the fourth quarter, stuck at its lowest level since at least 2005. “The nursing care annual inventory growth rate was nearly zero in the fourth quarter of 2016, while annual absorption was down by 0.6 percent,” NIC said. “Private-pay rents for the sector grew 2.6 percent year over year this quarter, down 0.5 percentage point from year-earlier levels, marking the slowest rent growth since at least 2006.”
Occupancy rates for independent living properties and assisted living properties averaged 91.1 percent and 87.6 percent, respectively, during the fourth quarter of 2016, the report said. These levels when compared with the third quarter of last year showed the occupancy rate for independent living up 0.1 percentage point and down 0.3 percentage point for assisted living, NIC said.
On a year-on-year basis, the rate for independent living was down 0.2 percentage point from its year-earlier seven-year high of 91.3 percent, while assisted living occupancy was down 0.7 percentage point from 2015 fourth quarter levels, putting occupancy in assisted living at its lowest ebb since 2010.
NIC said seniors housing annual absorption was 2.6 percent as of the fourth quarter of 2016, which is unchanged from the third quarter of 2016 and 2.3 percent higher than one year ago in 2015. “The seniors housing annual inventory growth rate in the fourth quarter of 2016 was 3.1 percent, up 0.3 percentage point from the prior quarter and its fastest pace since at least 2006,” the report said.
“It was a very active quarter for inventory growth. More than 5,900 units were delivered on a net basis, the most in a single quarter since NIC’s data collection began in 2006,” said Beth Burnham Mace, NIC chief economist.
“Inventory gains were strongest in assisted living, where nearly 4,100 units came online. The growth was not surprising in light of the number of units started 18 to 24 months ago—it often takes 18 to 24 months from groundbreaking to opening,” she said.
“It is also notable that net absorption of senior living units reached a record-high level during the quarter. Demand was very strong, just not strong enough to offset the growth in inventory.”
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