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 Senior Housing Occupancy Levels Soften in 2Q Across Care Settings, NIC Says

Occupancy levels for skilled nursing facilities and assisted living communities softened in the second quarter of 2019, reflecting a broader trend that saw overall senior housing occupancy rates decrease to 87.8 percent in second quarter from 87.9 percent in the same time frame of 2018, according to fresh data released on July 11 by the National Investment Center for Seniors Housing & Care (NIC).

NIC said the slight downtick in this year’s second quarter means that senior housing occupancy is at its lowest level since the second quarter of 2011. For comparison, senior housing occupancy recorded its most recent high of 90.2 percent in the fourth quarter of 2014, NIC said.

For the second quarter of 2019, skilled nursing occupancy was 86.7 percent, a slight downtick from the first quarter of this year when the measurements came in at 86.8 percent. NIC said annual rent growth in the latest quarter was 2.5 percent versus the 2.7 percent recorded in the first quarter of 2019. Skilled nursing annual absorption was 0.2 percent in the second quarter of 2019, compared to negative 0.2 percent in the first quarter of this year, while inventory growth was negative 0.2 percent in the second quarter against negative 0.4 percent in the first quarter of this year.

Assisted living occupancy levels were 85.1 percent in the second quarter of this year, the lowest level ever recorded by NIC data reporting, the group said. 

Across the broader measure of all senior housing, of the 31 metropolitan markets that comprise NIC’s Primary Markets, San Jose, Calif. (95.7 percent) and Portland, Ore. (91.6 percent) experienced the highest occupancy rates in the second quarter of 2019. On the flip side, Las Vegas (82.3 percent) and Houston (81.1 percent) recorded the lowest occupancy rates.

San Antonio experienced the biggest occupancy increase from a year ago, rising from 78.5 percent to 82.9 percent, and Los Angeles experienced the largest year-over-year drop from 90.1 percent to 87.9 percent.

Chuck Harry, NIC’s head of research and analytics, said even though national numbers indicate that senior housing occupancy trends softened slightly again, there are local economic and housing market performance factors that are driving the more substantial losses and gains being witnessed in certain areas. “Zoning, regulations, and shifting demographics may also contribute to this variation,” he said.

NIC data suggest a possible slowdown, even after any likely subsequent upward revisions, in new senior housing construction. NIC’s 31 Primary Markets saw 19,113 new construction starts in the past four quarters, the fewest new starts since 2014. These construction starts amounted to 3.0 percent of total existing senior housing inventory, down from 4.3 percent a year ago.

“We are seeing a clear downward trend occurring in construction starts nationwide for new senior housing units, especially for assisted living. Industry leaders should keep an eye on this data going forward to make informed decisions on new developments and other potential investments,” said Beth Burnham Mace, NIC’s chief economist.

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