The following analysis examines the occupancy distribution among care segments within entrance fee and rental CCRCs in the 99 NIC MAP Primary and Secondary Markets. The analysis also explores the relationship between 1Q 2024 occupancy levels and occupancy growth from 1Q 2022 to 1Q 2024, compared to the same-store asking rent growth from 1Q 2022 to 1Q 2024 – by region.
Key Takeaways:
- Most CCRCs maintained relatively high occupancy rates across living segments, with entrance fee CCRCs holding a slight edge over rental communities.
- The data revealed a pattern in the relationship between rent growth and occupancy levels. Regions with higher occupancy rates reported relatively smaller rent growth.
- Another pattern emerged in the relationship between rent growth and occupancy growth over the last two years. Regions with stronger occupancy growth generally reported smaller rent growth.
1Q 2024 Occupancy Distribution by Care Segment – Entrance Fee CCRCs vs. Rental CCRCs
The exhibit below explores the distribution of occupancy rates across entrance fee and rental CCRC care segments and shows a greater prevalence of entrance fee and rental CCRC care segments within the higher occupancy rate ranges.
Entrance Fee CCRCs. The data showed that 90% of entrance fee independent living segments reported an occupancy rate above 80% in the first quarter of 2024. This represents the largest share across all care segments and payment types. Assisted living follows closely at 87%, while memory care stands at 83%, and nursing care stands at 73%.
Rental CCRCs. 81% of assisted living segments reported an occupancy rate above 80%, followed by independent living and memory care segments both at 77%, and nursing care segments at 76%.
1Q 2024 Occupancy vs. Rent Growth from 1Q 2022 to 1Q 2024 – Rental CCRCs
The scatterplot plot below revealed a pattern in the relationship between occupancy levels and asking rent growth (on average) across U.S. regions. Notably, increases in asking rent appear to be associated with occupancy rates.
Regions with higher occupancy rates, such as the Northeast and Mid-Atlantic, reported relatively smaller rent growth. In contrast, regions like the Southeast showed the highest rent growth but the lowest occupancy rate.
The Pacific region appears to be an outlier, distinguished by both high rent growth and high occupancy rates, standing out from the general trend observed in other regions.
From 1Q 2022 to 1Q 2024 – Occupancy Growth vs. Rent Growth – Rental CCRCs
The relationship between asking rent growth and occupancy growth (on average) from 1Q 2022 to 1Q 2024 provides further insights. Notably, the graphical depiction of occupancies and rent growth patterns show a potential association between the two metrics.
Regions with more robust occupancy growth over the last two years, such as the Southwest, reported relatively lower asking rent growth. Conversely, regions like the Southeast showed the highest rent growth but the smallest occupancy growth. The data also revealed regional clusters in rent growth vs. occupancy growth.
The identified patterns were consistent across entrance fee CCRCs. While many factors, such as local market supply and demand dynamics, availability of options for residents with varying income demographics, the specific property and its amenities, and the perceived value of the unit in comparison to the competition in the area, may influence occupancy levels and growth, this analysis showed that asking rent growth is in fact a variable that could influence average occupancy levels overall as well as occupancy growth or improvements.