The pandemic disruption in all its forms continues to test and challenge the senior housing sector. But the level of agility, preparedness and responsiveness among senior housing operators has never been higher and remains a tailwind for senior housing demand, as measured by the change in occupied stock. In this analysis, we examine the drop and subsequent recovery in the level of occupied units by majority property type since the pandemic began to influence the senior housing sector, over the period from 1Q 2020 to 4Q 2021, and across the 31 NIC MAP Primary Markets and the 68 NIC MAP Secondary Markets Aggregates.

Note that this analysis looks at demand only and does not take into account inventory growth and properties under development.

Senior Housing Demand Contraction. The first quarter of 2021 marked the lowest level of occupied units since 2017. In the early months of the pandemic (1Q 2020 to 1Q 2021), about 42,100 units were placed back in the market on a net basis or “vacated” on a net basis for the 31 NIC MAP Primary Markets aggregate while 22,100 units were vacated for the 68 NIC MAP Secondary Markets, equivalent to a 7.4% and 7.2% decrease in occupied stock, respectively. At its low point, senior housing occupied units for both market aggregate concepts stood at their 1Q 2017 level.

Drilling down by Majority Property Type. The impact of the pandemic weighed heavily on majority assisted living (AL) properties across both the NIC MAP 31 Primary Markets and the 68 NIC MAP Secondary Markets aggregates with 8.4% and 9.0% declines in occupied units between 1Q 2020 and 1Q 2021, respectively. Demand contraction across majority independent living properties (IL) was relatively smaller at 6.6% for the NIC MAP Primary Markets (1.8 percentage points less than AL) and 5.6% for the NIC MAP Secondary Markets (3.4 percentage points less than AL).

The disparity in the degree of demand contraction during the first year of the pandemic may to be linked to the level of care and the relatively higher acuity levels and often greater frailty seen among residents in majority assisted living properties (defined as properties where assisted living units and/or memory care units comprised the largest share of inventory) than in majority independent living properties. In fact, findings from the 2020 study from NIC and NORC at the University of Chicago showed that the average mortality rate was the least in independent living and comparable to its corresponding county’s mortality rate, while average mortality rate for assisted living was slightly higher but notably not as high as for memory care or nursing care.

Senior Housing Demand Recovery. Due to unprecedented demand momentum in the last three quarters of 2021 (2Q 2021, 3Q 2021, 4Q 2021), senior housing occupied units grew by 4.6% for the 31 NIC MAP Primary Markets, equivalent to over 24,400 units absorbed on a net basis. Over the same period, occupied units within the 68 NIC MAP Secondary Markets increased by 5.1%, equivalent to 14,500 units absorbed on a net basis and 0.5 percentage points higher than the NIC MAP Primary Markets.

Although senior housing demand for both market aggregates have had three consecutive quarters of real momentum and consistency, the 4Q 2021 occupied stock for the 31 NIC MAP Primary Markets was still 3.1% below pre-pandemic 1Q 2020 levels, equivalent to 17,700 units vs. negative 2.5% for the 68 NIC MAP Secondary Markets, equivalent to over 7,500 units.

Drilling down by Majority Property Type. Like the sector’s demand contraction, its demand recovery has proven to also be uneven across different types of properties. While the demand contraction was relatively larger for AL properties, the demand recovery across AL properties has similarly outpaced that of IL properties. Since 1Q 2021, occupied units for AL properties for the NIC MAP Primary Markets increased by 6.1%, nearly two-fold that of IL (3.3%). The same pattern holds true for the 68 NIC MAP Primary Markets with 6.6% for AL, 2.8 percentage points higher than IL properties (3.8%).

This uneven recovery across different types of properties could be linked to several factors. One plausible explanation could be tied to the move-ins. In majority assisted living properties, there are at least two different types of residents, (1) residents from independent living properties following the continuum of care, and (2) new residents from outside congregate settings. Move-ins in independent living properties generally come from one source–outside congregate settings.

It could also reflect a stronger “pent-up demand” for assisted living, since AL is considered a more need-based property type and services are often required. Independent living is frequently considered more choice-based and the urgency to move into an independent living property may not be as strong.

Notably, not all operators are experiencing the same trends, however. Based on anecdotes from conversations, some operators are finding very strong demand for independent living properties, and sometimes stronger than assisted living. Conversations suggest that the socialization aspects of independent living are drawing potential new residents as the isolation associated with the pandemic has simply been overwhelming and the idea of living with others in a congregate setting has become quite compelling.

This dive into recent trends is based solely on senior housing demand patterns. The concept of aggregate demand or the number of occupied units is important to evaluate senior housing markets’ recoveries. Further, the strong demand recovery patterns across markets and properties show that senior housing demand was not lost, but rather, for many residents, it was largely deferred due to the pandemic.

These demand statistics indicate once again that the recovery differs across markets and by property type. Additionally, individual property performance has been affected by COVID exposure, infection control protocols, acuity levels of residents, move-in and move-out velocity, operator access to capital, pressured operating margins due to low occupancy rates, and staffing challenges. Many of these factors have not gone away and will continue to exert influence over operator, property and metro area performance in 2022. However, as demand more fully recovers toward pre-pandemic levels, the market should begin to balance out.

Senior Housing Demand Pulse Metric– By Majority Property Type

Other related analyses: Senior Housing Demand – Deep Dive & Outlook

NIC MAP clients can access the full analysis on senior housing demand patterns by property type, region, individual markets, property age, profit status, operator chain size, and other NIC MAP data dimensions.

While this analysis looks at demand only and does not take into account inventory growth and properties under development, recent analysis featuring NIC MAP Intra-Quarterly Data shows that senior housing stabilized occupancy for the NIC MAP^® Primary Markets held its ground in February 2022 despite the growth in inventory and the headwinds created by the Omicron surge and the consequential staffing crisis. This was also the case in September 2021 when occupancy withstood the Delta surge and was unchanged from August 2021.

Interested in learning more about NIC MAP Intra-Quarterly data? To learn more about NIC MAP data, powered by NIC MAP Vision, schedule a meeting with a product expert today.

The emerging active adult segment aims to attract baby boomers. The question: What do they want?

At a unique brainstorming session, NIC Spring Conference attendees will have the opportunity to help shape the answer to that question. The session, “The Time is Now: Developing the Active Adult Playbook,” will be among the highlights at the 2022 NIC Spring Conference in Dallas (March 23-25).

“Be a part of the conversation,” said Maria Nadelstumph, SVP of Brandywine Living’s Center of Excellence. She will co-facilitate the 75-minute session with Ben Burke, CEO of Headwaters Group.

In a recent interview, Nadelstumph described the format as something like a think tank experience and encouraged conference participants to attend the Thursday afternoon session (March 24). “Everyone can join the interactive dialogue to share their thoughts on the evolution of active adult communities,” she said.

The session will include a short introduction, followed by small group deep dive discussions to explore the challenges and opportunities of the active adult segment. The breakout groups will be facilitated by a powerhouse collection of experts—selected for their industry knowledge of operations, investments, marketing, development and consulting.

The introduction will include a video detailing the key aspects of the active adult market, along with comments from consumers who live in the communities.

The deep dive discussions will focus on three topic areas: People (consumer/marketing); Product (design/amenities); and Program (services/management.) The freewheeling discussion will tackle questions such as: Who is the “right” active adult resident? What are the “right” amenities? What are the “right” services?

Participants will also explore the nuances of the active adult market. For example, don’t call residents “seniors.” And is aging in place something to avoid or embrace?

Each group will report their findings during the last 20 minutes of the session to highlight aspects and themes that could be included in an active adult playbook.

Nadelstumph observed that the trending interest in the active adult segment is much like assisted living was 30 years ago when it emerged as a new type of living option for older people. “Everyone wants to know more about active adult,” she said.

Previewing what attendees can expect to learn at the session, Burke noted some striking differences between the active adult segment and traditional senior housing. Active adult residents tend to be younger than those in senior housing. Active adult services are unbundled, rents are lower than independent living, but higher than multifamily.

Labor pressures are not as much of an issue with active adult because the properties don’t require a big staff. Active adult is not a healthcare model. And residents tend to have a longer length of stay than those in traditional senior housing.

Burke also noted strong investor interest in the active adult segment. “Recent sales in the space show that the properties are highly valued,” he said.

Likening the collaborative session to a hands-on laboratory, Burke said that attendees will come away with a better understanding of the active adult segment and how they can explore further opportunities. Nadelstumph added, “Attendees will have an ‘aha’ moment.”

Despite the headwinds created by the Omicron surge and the consequential staffing crisis, senior housing stabilized occupancy for the NIC MAP^® Primary Markets held its ground in February 2022. This was also the case in September 2021 when occupancy withstood the Delta surge and was unchanged from August 2021.

Although the Omicron wave has slowed the occupancy recovery for the NIC MAP Primary Markets, a recovery nonetheless remains in place as evidenced by the patterns of the past 12 months. In fact, there has been no notable occupancy deterioration since February 2021 despite the Delta and Omicron surges. This is mainly due to the reduced level of severe illness and fatalities – thanks to the vaccines, infection control programs, and pandemic preparedness among experienced and agile operators. Further, a strong and consistent increase in demand, as seen by positive net absorption, still offers a positive outlook for 2022.

According to February 2022 Intra-Quarterly NIC MAP^® data, released by NIC MAP Vision, the stabilized occupancy rate for senior housing for the NIC MAP Primary Markets stood at 82.3% and was unchanged from the January 2022 reporting period on a three-month rolling basis. And from its time series low of 80.4% in June 2021, stabilized occupancy increased by 1.9pps but remained 7.2pps below pre-pandemic March 2020 levels of 89.5%.

The inventory of senior housing properties for the NIC MAP Primary Markets increased by 2.4%, equivalent to about 15,700 units from year-earlier levels in the February 2022 reporting period. This was the second smallest year-over-year inventory gain since March 2020.

Omicron paused the occupancy recovery in 12 of the 31 NIC MAP Primary Markets. However, stabilized occupancy increased or remained stable in 19 of the 31 Primary Markets for senior housing in the February 2022 reporting period compared with January 2022. Sacramento saw the largest improvement in February 2022, up 0.5pps to 82.1%. This placed occupancy just above year-earlier levels, but 9.5pps below pre-pandemic levels. Las Vegas stabilized occupancy fell 0.5pps from the January 2022 reporting period to 78.3% and is now 9.2pps below the pre-pandemic March 2020 level. The 0.5pps decline in February 2022 was the largest across the 31 NIC MAP Primary Markets.

Data highlights, including stabilized occupancy for majority independent living and majority assisted living properties, inventory growth patterns, and select NIC MAP Primary markets’ performance along with analysis and insights from the NIC Analytics team, including myself and NIC Chief Economist, Beth Mace are provided in the complimentary NIC Intra-Quarterly Snapshot monthly publication, available for download on our website. The data underlying every Intra-Quarterly Snapshot report is available to NIC MAP Vision clients.

Interested in learning more about NIC MAP Intra-Quarterly data? To learn more about NIC MAP data, powered by NIC MAP Vision, schedule a meeting with a product expert today.

As the pandemic eases and occupancy recovery in senior housing progresses, rising operating expenses may limit the degree to which operating margins will grow in the next six months. In the Wave 38 survey, three-quarters of respondents expect margins to increase; the majority anticipate the increase will be between 1% and 5%. Nearly three-quarters of respondents are optimistic that labor and staffing challenges will begin to ease in the second half of 2022 or 2023. Currently, all respondents are paying staff overtime hours and four out of five rely on agency or temp staff to fill in the gaps. About one-half do not expect their reliance on agency or temp staff to change in 2022; however, 40% anticipate it will decrease. (Note that nine out of ten respondents to the Wave 38 survey lend their support for a federal investigation of anticompetitive practices by nursing and other direct care staffing agencies.) The pace of move-ins remained strong for assisted living and improved in the nursing care segment but slowed for independent living and memory care. Reasons cited by respondents that observed a deceleration in the pace of move-ins included “normal movements,” “Omicron,” “lack of available staff,” and the “slowdown of hospital admissions.” Smaller operators are less likely to have achieved pre-pandemic lead volumes than larger organizations. In Wave 38, more than half of the survey’s largest organizations have reached pre-pandemic lead levels compared to only 15% of single-site operators.

–Lana Peck, Senior Principal, NIC

NIC’s Executive Survey of senior housing and skilled nursing operators was implemented in March 2020 to deliver real-time insights into the impact of the pandemic and the pace of recovery. In its third year, the “ESI” is transitioning away from the COVID-19 crisis to focus on other challenges facing the industry. While some standard questions will remain for tracking purposes, in each new survey “wave,” new questions will be added. Let us hear your suggestions!

This Wave 38 survey includes responses from February 7 to March 6, 2022, from owners and executives of 67 small, medium, and large senior housing and skilled nursing operators from across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties. More detailed reports for each “wave” of the survey and a PDF of the report charts can be found on the NIC COVID-19 Resource Center webpage under Executive Survey Insights.

Across 38 Waves of the ESI, the pace of move-ins has closely corresponded with the broad incidence of COVID-19 infection cases in the United States. This is demonstrated in the timeline below that shows the share of organizations reporting an increase in the pace of move-ins during the prior 30-days. Data from the Wave 38 survey, which was conducted during the month of February, reflects an increase in the share of operators reporting acceleration in the pace of move-ins as the Omicron variant peaked and cases began to decline in the U.S. in the middle of January.

Since the Wave 36 survey (reflecting operator experiences in November), one-half of organizations with assisted living units reported acceleration in the pace of move-ins. By contrast, the pace of independent living and memory care move-ins slowed. Likely, in part due to seasonality, Omicron, and residents moving to higher levels of care, one-quarter (27%) of organizations with independent living units reported a deceleration in the pace of move-ins since the previous survey (27% vs. 13%), and roughly equal shares of organizations with independent living units reported acceleration in the pace of move-outs since the prior survey (27% vs. 15%). The pace of move-ins in the nursing care segment reversed its slowdown trend in Wave 38. However, notably fewer organizations with memory care units reported an increase in the pace of move-ins since the Wave 36 survey. Reasons cited by respondents that observed deceleration in the pace of move-ins included “normal movements,” “Omicron,” “lack of available staff,” and the “slowdown of hospital admissions.” Regarding reasons for acceleration in the pace of move-outs, one-half (53%) of organizations cited residents moving to higher levels of care.

Smaller operators are less likely to have achieved pre-pandemic lead volumes than larger organizations in Wave 38. Given pent-up demand coming out of the pandemic and questions about the sustainability of historic and near-historic absorption rates during the third and fourth quarters of 2021 per NIC MAP Vision data, this measure in the ESI may be a leading indicator to watch with regards to occupancy recovery. As shown below, more than one-half (56%) of the survey’s largest organizations have reached pre-pandemic lead levels compared to only 15% of single-site operators. Potential reasons for this wide disparity in favor of larger organizations may include sizable sales teams and marketing budgets, sophisticated online and digital marketing capabilities, and geographic, demographic, and economic market diversity—all of which comes with scale.

Staffing continues to be operators’ most significant challenge, but nearly three-quarters of respondents are optimistic that improvements are on the horizon. Since last July, nearly all operators (97% – 100%) responding to NIC’s Executive Survey Insights have reported staff shortages. Attracting community/caregiving staff and employee turnover remain the most significant challenges for survey respondents (86% and 60%, respectively). When asked about backfilling staff shortages, all respondents (100%) reported paying overtime hours in Wave 38, and four out of five respondents are currently tapping agency or temp staff (81%). Of those organizations, about one-half (49%) do not expect their reliance on agency or temp staff to change in 2022; however, 40% anticipate it will decrease. As shown below, just under one-third (29%) expect staffing challenges to improve in the second half of this year, while 43% believe labor markets will ease sometime next year.

Nine out of ten respondents to the Wave 38 survey (90%) lend their support for a federal investigation of anticompetitive practices by nursing and other direct care staffing agencies. At the end of January, the American Health Care Association and National Center for Assisted Living (AHCA/NCAL) with the American Hospital Association (AHA), sent a joint letter to the White House’s COVID-19 Response Team Coordinator, requesting assistance due to reports of anticompetitive practices by nursing and other direct care staffing agencies. AHCA/NCAL asked that the White House “urgently devote” the federal government’s attention to these practices. (Both organizations are still waiting on a response from the Federal Trade Commission after writing to the agency to investigate the matter last October.)

Rising operating expenses may limit the degree to which margins will grow in the next six months. As occupancy recovery progresses as the pandemic eases, operators’ margins may improve. In the Wave 38 survey, only 5% of respondents anticipate their margins will decrease over the next six months, while 75% expect margins to increase. The majority (55%) anticipate the increase will be between 1% and 5%.

Wave 38 Survey Demographics

• Responses were collected between February 7 and March 6, 2022, from owners and executives of 67 seniors housing and skilled nursing operators from across the nation. Owner/operators with 1 to 10 properties comprise roughly one-half (54%) of the sample. Operators with 11 to 25 and 26 properties or more make up the other half of the sample (18% and 28%, respectively).
• Just over one-half of respondents are exclusively for-profit providers (54%), about one-third operate not-for-profit seniors housing and care organizations (31%), and 15% operate both.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 72% of the organizations operate seniors housing properties (IL, AL, MC), 25% operate nursing care properties, and 35% operate CCRCs (aka life plan communities).

Owners and C-suite executives of seniors housing and care properties, please help us tell an accurate story about our industry’s performance. If you are an owner or C-suite executive of seniors housing and care and have not received an email invitation to take the survey, please get in touch with Lana Peck at lpeck@nic.org to be added to the list of recipients.

NIC wishes to thank respondents for their valuable input and continuing support for this effort to provide the broader market with a sense of the evolving landscape as we recover from the pandemic. This is your survey! Please take the Wave 39 survey and suggest new questions for Wave 40.

In the years ahead, millions of aging middle-income Americans will need a reasonably priced housing and care option. But innovative ideas are vital to solve the issue of affordability.

Cutting-edge strategies for the senior housing middle market will be shared by the industry’s top leaders and stakeholders at a session during the 2022 NIC Spring Conference in Dallas (March 23-25.)

“The middle market represents a huge opportunity” said NIC Senior Principal Ryan Brooks. He will be a co-speaker at the session, “The Forgotten Middle Market: Vision to Execution.”

A presentation by Brooks during a panel discussion with industry experts will be followed by attendees participating in facilitated breakout group discussions— to take a deep dive into topics addressed by the panel, and strategies to apply these ideas to their business models.

To preview what attendees can expect to learn at the session, Brooks recently spoke with session moderator Diane Burfeindt, managing partner at Trilogy Connect; and co-facilitator Jim Thompson, senior vice president and director of senior housing investments, BOK Financial.

The theme of opportunity will be explored at the session. The need is growing for the product, first identified by NIC in its study “The Forgotten Middle.” It shows that millions of seniors will not be able to afford most of today’s private-pay senior housing communities. These seniors don’t qualify for Medicaid or other government assistance either. So, what’s the best approach?

Repurposing properties is emerging as a key strategy and will be discussed at the session. The high cost of new construction makes it difficult to provide an affordable middle-market property, according to Thompson. However, the pandemic may have provided a “window of opportunity” for developers and investors to acquire older properties at a discounted price. “Repurposing properties can provide an affordable real estate component,” said Thompson.

Other creative real estate strategies will be explored. These include partnering with affordable housing developers or designing new types of developments that combine affordable senior living with retail or multi-generational apartment properties.

“Affordable care is a big issue,” said Burfeindt. She added that it depends on how “care” is defined. Is it medical care? Service coordination? “What should a middle-market product provide?” she asked. Instead of a community that offers everything for the resident, the middle-market product could create an environment where residents can do things for themselves or link them to outside services.

Panelists will discuss creative care solutions, such as partnering with Medicare Advantage programs to help defray assisted living costs. Residents could be tapped as volunteers for some duties along with volunteers from the wider community. Funding may also be available from local social service groups. “What we’re finding is that organizations are developing strategies that are not one-size-fits-all. They are identifying the targeted income in their community and working towards partnerships and solutions that bring existing tools together in a new way that is ultimately less resource-intensive,” Burfeindt remarked.

Session attendees will hear how investors view the middle market. The sheer size of the market is of interest to investors, according to Thompson. A high, stable census and dependable cash flow will be a characteristic of the middle market for years to come, he said. He added that though returns could be lower than traditional private-pay senior housing, multifamily investors may see a middle market senior living product as a way to diversify their portfolio’s cash flow.

Middle-market staffing strategies will also be addressed during the session. Attendees will learn how technology and other innovations will help improve affordability and ease staffing pressures. “Staffing in the middle-market will look very different than we’re accustomed to seeing in other senior housing and care settings,” said Thompson.

Mark your calendar for this can’t-miss session at the 2022 NIC Spring Conference:

“The Forgotten Middle Market: Vision to Execution”
Thursday, March 24, 1:30-3:15, Level 3, Trinity Ballroom