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 Senior Housing Occupancy Sees Slight Bump Up in Q4 2019

New data from the National Investment Center for Seniors Housing & Care (NIC) showed senior housing occupancy increased 0.1 percent in the fourth quarter of 2019 to 88.0 percent, with plenty of variation across the nation’s metropolitan markets.

For instance, NIC said San Jose, Calif. (95.7 percent), and New York (91.3 percent) experienced the highest occupancy rates of the 31 metropolitan markets that make up NIC’s Primary Markets. Atlanta (82.7 percent) and Houston (82.5 percent) balanced the scale on the other end with the lowest occupancy for the 31 measured markets.

NIC said Las Vegas experienced the largest occupancy increase from a year ago, rising from 80.3 percent to 84.1 percent, and Cincinnati recorded the largest year-over-year decrease, falling from 89.7 percent to 86.4 percent in the last quarter of 2019.

Among the senior housing settings, assisted living occupancy increased to 85.7 percent in the fourth quarter, from a recent record bottom of 85.1 percent earlier in the year as demand outpaced new inventory growth. “The occupancy rate for independent living decreased to 90.0 percent in the fourth quarter, below its recent peak of 90.4 percent in the first quarter of 2019 and down from 90.3 percent one year earlier,” the report said.

Commenting on the data, Chuck Harry, head of research and analytics at NIC, said, “It appears that 2019 was an inflection year for assisted living, with the occupancy rate at its highest level in two years after having reached its trough and new construction continuing to slow.”

Nursing centers saw occupancy unchanged from quarter to quarter, with fourth quarter 2019 levels at 86.5 percent, the report said.

For the year, net absorption totaled 15,643 units for senior housing, the most units demanded on a net basis for a full year since NIC began reporting the data in 2006. Inventory growth decelerated from 21,479 units in 2018 to 16,750 units in 2019 but was nevertheless stronger than net demand.

“Demand was strong, but simply not strong enough to offset the growth in inventory,” said Beth Burnham Mace, NIC’s chief economist. “The slowdown in starts and in the number of units under construction suggest an improving outlook for senior housing, especially for assisted living.”

NIC’s Primary Markets saw 17,718 new construction starts in the past four quarters, the fewest new construction starts since 2014. These construction starts amounted to 2.8 percent of total existing senior housing inventory, down from 3.8 percent a year ago and 4.6 percent in early 2018.

NIC data also reveal that continuing care retirement communities (CCRCs) recorded higher occupancy rates than non-CCRC properties in the fourth quarter of 2019 (91.2 percent vs. 86.3 percent). NIC said part of the explanation can be attributed to lower inventory growth for CCRCs than for non-CCRC properties.

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