Growth in Same Store Asking Rents Decelerates
FOR IMMEDIATE RELEASE: Wednesday, October 11, 2017
Contact: Biba Aidoo, baidoo@nic.org; 410-267-0504
ANNAPOLIS, Md. – The occupancy rate for seniors housing properties averaged 88.8% in the third quarter of 2017 unchanged from the prior quarter and down 0.9 percentage point from year-earlier levels. This placed occupancy 1.9 percentage points above its cyclical low of 86.9% reached during the first quarter of 2010 and 1.4 percentage point below its most recent high of 90.2% in the fourth quarter of 2014.
The occupancy rates for independent living properties and assisted living properties averaged 90.5% and 86.6%, respectively, during the third quarter of 2017. The occupancy rate for independent living was down 0.1 percentage point from the prior quarter and down 0.6 percentage point from year-earlier levels. The occupancy rate for assisted living was up 0.2 percentage point from the second quarter, when it had fallen to its lowest point ever for the second time in the eleven-year time series. The occupancy rate for assisted living was down 1.2 percentage point from year-earlier levels.
Seniors housing annual absorption was 3.2% as of the third quarter of 2017, unchanged from the second quarter of 2017, up 0.6 percentage point from one year earlier, and remained the fastest pace since NIC began reporting the data in 2006. The seniors housing annual inventory growth rate in the third quarter of 2017 was 4.1%, down 0.1 percentage point from the second quarter, when it had reached its fastest pace since NIC began reporting the data in 2006.
“Assisted living inventory grew by a preliminary 1.1% in the third quarter, less than half the record pace we saw the prior quarter, while net absorption of units remained strong on the heels of last quarter’s record quarterly increase,” said Beth Burnham Mace, chief economist of NIC. “Nevertheless, assisted living occupancy remained low in the third quarter at only 86.6% showing the effects of inventory growth exceeding demand for nine of the past twelve quarters.”
Current construction as a share of existing inventory for seniors housing preliminary was unchanged from the prior quarter at 6.1% and was 0.5 percentage point below its recent high of 6.6% in the third quarter of 2016.
Seniors housing construction starts within the 31 Primary Markets during the third quarter of 2017 preliminarily totaled 4,731 units, which included 1,851 independent living units and 2,880 assisted living units. On a preliminary four-quarter basis, starts totaled 18,348 units. Construction starts data is often revised retrospectively in subsequent quarters as additional information becomes available.
During the third quarter of 2017, the average rate of seniors housing’s annual asking rent growth was 2.7%, down 0.7 percentage point from the prior quarter, and down from 3.8% in the third quarter of 2016. For comparison purposes, labor expense growth as measured by the annual change in assisted living average hourly earnings was 5.5% in the second quarter, according to the Bureau of Labor Statistics.
“The sustained competitive market conditions across the metropolitan markets likely contributed to the deceleration in the same store asking rent growth,” said Chuck Harry, NIC’s chief of Research & Analytics. “While many markets are still in the process of absorbing the units that came online over the past couple of years, the construction pipeline remains at elevated levels even though it too is no longer accelerating.”
The nursing care occupancy rate decreased to 86.2% in the third quarter of 2017 from 86.6% in the second quarter of 2017. The nursing care annual inventory growth rate was 0.3% in the third quarter of 2017, while annual absorption was down by -0.4%. Private pay rents for the sector grew 2.5% year over year this quarter, down 0.4 percentage point from year-earlier levels.
[Note: For 3Q17 NIC MAP data specific to your local metro market, please refer to the regional key metrics charts.]
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About NIC
The National Investment Center for Seniors Housing & Care (NIC) is a 501(c)3 organization established in 1991 whose mission is to enable access and choice by providing data, analytics and connections that bring together investors and providers. For more information, visit natinvcenterdv.wpengine.com, and follow NIC on Twitter.
Since 1991, NIC has been the leading source of research, data, and analytics for owners, operators, developers, capital providers, researchers, academics, public policy analysts, and others interested in meeting the housing and care needs of America’s seniors. NIC has proudly sponsored the Seniors Housing & Care Journal, a peer-reviewed journal for applied research in the seniors housing and care field, since 1993. One of NIC’s major initiatives to further its mission is the NIC MAP® Data Service (NIC MAP). NIC MAP’s web-based suite of research and analytic tools track and report seniors housing and care data for more than 14,000 properties within 140 U.S. metropolitan markets. Established in 2004, NIC MAP creates transparency for seniors housing and care by offering accurate, unbiased, and actionable market-level data on all of the sector’s property types and care segments, including independent living, assisted living, memory care, and nursing care, as well as continued care retirement communities (CCRCs). Our data is updated quarterly, monthly, and weekly, and is inclusive of property-level inventory by unit type, sales transactions, properties under construction and in the planning phase, aggregated occupancy and rent comparables, demographics, and much more. For more information, call 410-267-0504.