During a recent webinar with NIC MAP Vision clients, the NIC Analytics Team presented findings on key third quarter 2024 senior housing data trends. Morgin Morris, Senior Vice President with KeyBank Real Estate Capital and Jim Dooley, Director with JLL Capital Markets joined Lisa McCracken, NIC’s Head of Research for a conversation on the capital markets, debt lending, and transaction activity.
Key takeaways from the third quarter data included the following:
Takeaway #1: Occupancy Increased for the 13th Consecutive Quarter
- The occupancy rate for the 31 NIC MAP Primary Markets rose 0.7 percentage points to 86.5% in the third quarter.
- This marked the thirteenth consecutive quarter of occupancy gains, driven by resident demand for senior housing units outpacing the amount of new inventory arriving online.
Takeaway #2: Occupancy Gap Between Assisted Living and Independent Living Continued to Narrow
- In the third quarter of 2024, there was a 0.5 percentage point increase in the independent living occupancy rate and a 0.9 percentage point increase in the assisted living occupancy rate.
- Though the independent living occupancy rate still exceeded the assisted living occupancy rate (87.9% vs 85.1%), assisted living occupancy gains have outpaced those of independent living in recent years.
Takeaway #3: Senior Housing Occupancy Growth Across All Markets
- We have seen positive occupancy rate movement in each of the 31 Primary Markets over the year ending in the third quarter of 2024.
- The strongest gains were in Cincinnati and Phoenix, which each increased by 4.0 percentage points over the past year.
- The smallest gains were in Riverside, CA, where occupancy rates are roughly in line with the NIC MAP average, and St. Louis, which has an occupancy rate below the NIC MAP average.
Takeaway #4: Senior Housing Units Under Construction Least Since 2014
- Turning to construction trends, for both Majority Independent Living and Majority Assisted Living properties, we continue to observe an ongoing decline in the number of units under construction, which today are back to levels last seen in 2014.
- This decline may reflect ongoing headwinds to development such as access to capital, cost of capital, and construction costs.
Takeaway #5: Construction Starts Below Inventory Growth
- Construction starts have continued to decline, and we have now reached a point where the number of new units breaking ground annually has fallen below the number of new units being delivered.
- This trend last occurred in 2021 – and before that – in 2009 during the Global Financial Crisis.
Guest panelists Morgin Morris and Jim Dooley both indicated that there is an increase in optimism within the industry and that they are seeing increased activity with transactions, competitive bidding, lending and even some minor movement with new development inquiries.