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.”