The following analysis examines occupancy and year-over-year changes in inventory, and same-store asking rent growth—by care segment—within CCRCs and non-CCRCs in the 99 combined NIC MAP Primary and Secondary Markets. The analysis also explores the distribution of units in CCRCs and non-CCRCs by year of opening as well as regional occupancy rates by profit status (not-for-profit CCRCs vs. for-profit CCRCs) and payment type (entrance fee CCRCs vs. rental CCRCs) during the third quarter of 2023.
NIC MAP®, powered by NIC MAP Vision, collects primary data on occupancy, asking rents, demand, inventory, and construction for about 16,200 independent living, assisted living, memory care, skilled nursing, and continuing care retirement communities (CCRCs—also referred to as life plan communities) across 140 U.S. metropolitan markets. The dataset includes more than 1,164 not-for-profit and for-profit entrance fee and rental CCRCs in these 140 combined markets, including 1,086 in the 99 combined Primary and Secondary Markets.
3Q 2023 Market Fundamentals by Care Segment – CCRCs vs. non-CCRCs
The exhibit below illustrates the relative market performance of CCRCs vs. non-CCRCs by care segment in the third quarter of 2023 and includes year-over-year changes in occupancy, inventory, and asking rent growth.
Occupancy. Overall, the occupancy rate for CCRCs continued to outpace that of non-CCRCs across all care segments. The difference in the third quarter 2023 occupancy rates between CCRCs and non-CCRCs was largest for the independent living segment (6.3pps) and the assisted living segment (4.4pps), and smallest for the nursing care segment (1.4pps).
The CCRC independent living segment had the highest occupancy (90.5%) in the third quarter of 2023, followed by CCRC assisted living and memory care segments (87.5% and 86.5%, respectively).
In terms of occupancy improvements from one year ago, the largest occupancy gains for both CCRCs and non-CCRCs were seen across memory care and nursing care segments, while the smallest gains were seen across independent living segments.
Asking Rent. The monthly average asking rent (aka “monthly fees”) for CCRCs remained higher across all segments compared with non-CCRCS. Asking rent for CCRCs recorded the largest annual growth in the assisted living and memory care segments (5.3% to $6,633 and 5.8% to $8,341, respectively). Similarly, the highest year-over-year asking rent growth for non-CCRCs was seen in the assisted living and memory care segments (5.7% to $6,083 and 5.6% to $7,738, respectively). Note, these figures are for asking rates and do not consider any discounting that may be occurring.
Inventory. From year-earlier levels, nursing care inventory for both CCRCs and non-CCRCs experienced the largest declines (negative 1.7% and 1.1%, respectively). The highest year-over-year inventory growth was reported for the non-CCRC independent living segments (3.4%) and memory care segments (2.0%).
Negative inventory growth can occur when units/beds are temporarily or permanently taken offline or converted to another care segment, outweighing added inventory.
By Region – Not-for-Profit and Entrance Fee CCRCs Outperform For-Profit and Rental CCRCs Across All Regions
Regional Occupancy Rates – By Profit Status
Among the 1,086 CCRCs spread across the 99 Primary and Secondary Markets tracked by NIC MAP Vision, approximately 70% are operated as not-for-profit, and 30% are operated as for-profit.
The exhibit below shows that in the third quarter of 2023, not-for-profit CCRCs had higher occupancy rates than for-profit CCRCs across all regions except in the Pacific. The largest differences in third quarter occupancy between not-for-profit CCRCs and for-profit CCRCs were in the Mid-Atlantic (5.4pps), followed by the Northeast (4.9pps), then the Southwest and West North Central (4.0pps).
For Not-For-Profit CCRCs. The Mid-Atlantic (92.2%), Northeast (91.5%), and Pacific (89.1%) regions had the strongest occupancy rates in the third quarter of 2023. The Southwest region had the lowest occupancy at 86.1%.
For-Profit CCRCs. The Pacific (90.9%), Mountain (86.9%), and Mid-Atlantic (86.8%) regions had the strongest occupancy rates in the third quarter of 2023. The Southwest region had the lowest occupancy at 82.1%.
Regional Occupancy Rates – By Payment Type
Among the 1,086 CCRCs spread across the 99 Primary and Secondary Markets tracked by NIC MAP Vision, 53% are operated as entrance fee, and 47% are operated as rentals.
In the third quarter of 2023, entrance fee CCRCs had higher occupancy rates than rental CCRCs across all regions. The most significant difference between entrance fee and rental occupancy was reported for the West North Central region, where entrance fee CCRC occupancy was 5.4pps higher than rental, followed by the Mountain (4.9pps), and the Southeast (4.8pps).
Entrance Fee CCRCs. The Mid-Atlantic, Northeast, and Pacific regions had the strongest entrance fee CCRC occupancy rates – all above 90%. The lowest entrance fee CCRC occupancy was in the Southwest region at 86.0%.
Rental CCRCs. The Mid-Atlantic, Northeast, and Pacific regions had the highest occupancy rates, ranging from 87.4% to 88.7%, whereas the Southeast region had the lowest occupancy rate of 82.6%.
Looking ahead. The strong market fundamentals – characterized by strong demand and limited new supply – will likely continue through 2024. However, this must be viewed within the context of a “higher-for-longer” interest rate environment, which may present both challenges and opportunities for the sector. Operators who can effectively assess and embrace these changing trends, adapt with agility, and drive innovation will undoubtedly experience remarkable growth and success in the future.
Look for future blog posts from NIC to delve deep into the performance of CCRCs.
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This article originally appeared in Ziegler’s Senior Living Finance Z-News.