The tendency of stability is to breed stability. 

In the November 2023 NIC Insider newsletter, NIC Analytics published an in-depth analysis examining the length of time required to build a senior housing community, i.e., construction duration (in months), and explored the shifts taking place in construction timelines across different regions. 

The analysis showed a steady and consistent increase in the time it takes to construct a senior housing community from 2015 to 2023, suggesting that extended construction duration is not exclusively a post-pandemic trend. Notably, median construction durations have risen from 16 months in 2015 and 2016, to 19 months in 2019, to 25 and 24 months in 2022 and 2023, respectively. Additionally, the analysis suggests that heightened project deliveries and “oversupply” have played a role in the variability of construction durations and have contributed to a protracted construction process. Challenges stemming from the pandemic, high interest rates, higher financing construction costs, limited availability of debt, and increased development costs have all contributed to the prolonged construction duration. 

In this article, NIC Analytics explores the senior housing construction cycle across the 99 NIC MAP Primary and Secondary Markets, drawing comparisons between the trends observed during the Global Financial Crisis (GFC) and the recent pandemic. The analysis further explores units under construction and construction as a percent of inventory across all U.S. regions.  

Key Takeaways: 

• Fluctuations in the number of units under construction serve as a proxy for the overall confidence in new senior housing projects and capital environment, signaling periods of stabilization and unhindered growth when the pace of construction activity shifts towards positive, or green territory.  
• Consensus points toward mid- or late-2024 as the most likely period for senior housing construction starts to reach their lowest point. 
• Success in each region relies on aligning construction activity and new supply with market absorption, a balance made more delicate in the face of pandemic-induced disruptions and changing economic conditions.  
• Delays in construction deliveries, while challenging, have in some cases supported occupancy recovery and absorption-to-inventory velocity (AIV ratio) by preventing a rapid influx of new supply. 

Senior Housing Units Under Construction: Trends, Shifts, and Economic Drivers. 

GFC Downturn. The exhibit below shows the stark impact of the GFC in 2009 and 2010, with senior housing units under construction plummeting by -43% and -10%, respectively. These years saw significant economic challenges, including a severe liquidity crunch, plummeting property values, and a sharp decline in real estate investment. This crisis eroded confidence in new construction projects, as financial institutions faced substantial losses, and credit markets tightened, making funding for new developments challenging. 

Post-GFC Recovery. The period between 2010 and 2015 witnessed a notable growth in units under construction in the senior housing sector, signaling strong market fundamentals and recovery. This resurgence, although starting from a relatively lower base, was driven by regained market confidence and an improved capacity for new construction and expansion in senior housing. Key to this revival were favorable senior housing market conditions, characterized by a balance of supply and demand dynamics and increased occupancy, which encouraged new developments. 

Construction Peak and Delivery Boom. Between 2015 and the onset of the pandemic in 2020, the senior housing sector experienced a consistent positive growth in units under construction. However, this period also witnessed a deceleration in the pace of new construction, suggesting that many units reached completion and were delivered to the market. This trend indicates a typical cycle in housing markets in general, where a construction boom is often followed by a phase of heightened deliveries, as depicted by the deceleration in the pace of units under construction. 

Pandemic Disruption and Economic Headwinds. The COVID-19 pandemic ushered in significant disruptions, starting in 2020 with a -13% decline and continuing with -4% in 2021 and -8% in 2022. This downturn reflects the uncertainty and challenges faced by the senior housing sector amid the global health crisis. The relative stabilization in 2021 indicates the market’s resilience, managing to level off after the initial shock, despite not returning to positive growth. However, the further decline of -8% in 2022 and -15% in 2023 can be largely attributed to an increasingly challenging lending environment, exacerbated by high interest rates, inflation, and volatile capital market conditions. These factors have impacted the financial viability and the overall feasibility of new construction projects within the senior housing sector. 

Overall, these trends reflect the sensitivity of the senior housing construction pipeline to broader economic conditions and market dynamics. Additionally, the fluctuations in the number of units under construction serve as a proxy for the overall confidence in new senior housing projects and capital environment. These changing trends can also act as indicators of different phases within the senior housing market cycle, notably signaling periods of stabilization when the pace of construction activity shifts towards positive, or green territory.  

Crises, inherent in the nature of capitalism, impact the senior housing sector. Following the GFC, the sector experienced an extended period of stability, exemplifying the principle that “the tendency of stability is to breed stability.” There remains a reason for tempered optimism, the sector’s strong fundamentals, along with favorable long-term demographic trends, suggest a positive outlook for the future. In the short term, a healthy equilibrium between supply and demand will serve the sector’s ongoing recovery for achieving sustained and positive growth. 

As Mark Twain aptly noted, “History doesn’t repeat itself, but it often rhymes.” This adage resonates with the pattern identified in the interconnectedness of economic health, investor confidence, and senior housing construction activity in signaling periods of stabilization and unhindered growth. In light of this, an important question arises: 

When do industry stakeholders expect senior housing construction starts to bottom out?  

NIC MAP Vision has been conducting a poll during its last three data release webinars (1Q23-2Q23-3Q23), seeking industry expectations on when senior housing construction starts are likely to bottom out. 

The results indicated that a sizable proportion of respondents, approximately 40% across all three quarters, anticipate the bottoming out of senior housing construction starts in the first half of 2024. However, there is a slight shift in sentiment over time, with a gradual increase in the number of respondents who expect the nadir to occur beyond 2024 – rising from 15% in the first quarter of 2023 to 17%, and then to 20% in subsequent polls. This shift suggests a trend of diminishing confidence in a quick construction market correction amid challenging capital market conditions and lending environment. Despite this, the consensus in all three polls points towards mid- or late-2024 as the most likely period for senior housing construction starts to reach their lowest point.  

As background, a separate occupancy poll conducted by NIC MAP Vision indicated that senior housing occupancy is expected to fully recover and return to pre-pandemic levels by the second half of 2024. These results somewhat align with the construction poll question results and occupancy outlook analysis conducted by NIC Analytics. These forward-looking insights provide combined perspectives on both construction trends and occupancy rates in the near future – fundamentals of the senior housing market. 

Regional Construction Trends and Recovery Patterns in Senior Housing 

The regional distribution of senior housing units under construction shows that the West Coast and the Eastern part of the country are more active in developing senior housing projects. “This could be indicative of factors such as demographic shifts, development-friendly regulations, or well-balanced supply and demand dynamics in these areas.” However, a cross-check of this distribution with the absorption–to–inventory velocity (AIV) ratio analysis reveals several insights: 

The Pacific region is at the forefront of senior housing construction, representing 19% of the total units under construction across the 99 NIC MAP Primary and Secondary Markets, which is 5.3% of the region’s existing inventory. The Pacific region experienced the most notable impact during the peak of the pandemic, with the lowest AIV ratio and the highest occupancy decline among all regions, and as of the third quarter of 2023, its recovery in terms of occupancy is still trailing behind other regions.  

There are indications of a slowdown in the progress of existing senior housing construction projects. The Pacific region stands out with a notable increase in median construction duration, rising by 8 months from 16 to 24 months when comparing the pre-pandemic and post-pandemic periods. This increase suggests that many projects have stalled or are taking longer to complete than initially planned. Looking ahead, this trend could lead to a potential risk of oversupply in the region. If these projects contribute to a sudden increase in new supply without an equivalent rise in demand, the Pacific region may be challenged to effectively absorb newly added units. 

The Mid-Atlantic and Southeast regions are both experiencing a robust construction environment, accounting for 19% and 17% of the total units under construction, respectively. Both regions also experienced notable occupancy declines during the pandemic, however, they are nearing recovery with positive AIV ratios (above the AIV threshold) and noteworthy occupancy increases. while the construction as percent of inventory is relatively high in these regions, at 7.5% for the Mid-Atlantic and 4.7% for the Southeast, it has not led to a situation of new supply outpacing demand and negatively affecting the recovering occupancy in recent years. 

Additionally, the median construction duration in both regions has seen relatively small increases, suggesting that projects are still being completed in a timeframe comparable to the pre-pandemic era. This indicates an efficient delivery of new units, aligning well with the current demand without causing an imbalance in the market. 

The Southwest region presents a more balanced scenario, accounting for 11% of total construction activity, which is equivalent to 4.9% of the region’s existing inventory. Having achieved pre-pandemic occupancy levels, the Southwest region exemplified a balanced market with the highest positive AIV ratio across all regions, indicating that the rate of construction and subsequent deliveries (new supply) are well-aligned with the market absorption.  

In the Mountain region, which accounts for 7% of construction activity and represents 4.2% of the region’s existing inventory, there has also been a successful recovery in occupancy rates. This suggests that the pace of construction and new supply are well-aligned with market absorption. However, delays in project deliveries are likely more common in the Mountain region, with the median construction duration increasing by 10 months – from 19 to 29 when comparing the periods before and after the pandemic. This slowdown in construction completion may have supported the occupancy recovery in the Mountain region, by preventing more new deliveries/supply during a critical recovery time. 

The Northeast, East North Central, and West North Central regions have relatively lower construction activity in comparison to their existing inventory. Additionally, these regions are in varying stages of occupancy recovery. A key factor to their continued recovery will be maintaining a market equilibrium where the pace of new deliveries aligns closely with demand.  

In terms of construction duration, the Northeast exhibited some of the shortest median construction durations in the pre-pandemic era. However, in the post-pandemic period, its median construction duration ranked among the highest in the country, like the Pacific and Mountain regions. 

In conclusion, this regional analysis of senior housing construction cycles, constructions durations, AIV ratios, and occupancy recovery across the U.S. regions reveals different trends and patterns. From the busy construction environment in the Pacific and Mid-Atlantic to the strong recovery in the Southwest and the Mountain regions, to the more measured pace in the Southeast region, each region presents its unique set of challenges and opportunities. Key to the success in each region is aligning construction activity and new supply with market absorption, a balance made more delicate in the face of pandemic-induced disruptions and changing economic conditions. Delays in construction deliveries, while posing challenges, have in some cases supported occupancy recovery by preventing a rapid influx of new supply. 

As the senior housing market continues to navigate post-pandemic recovery and economic fluctuations, regional nuances and market focused analyses using NIC MAP Vision data will be valuable in providing the actionable insights needed to effectively drive and sustain growth in senior housing.                                                                       

Look for future blog posts from NIC to delve deep into senior housing construction.  

The construction of senior housing communities has faced a myriad of challenges in recent years, evidenced by a marked decline in construction starts and extended construction durations. These challenges have been apparent since the onset of the COVID-19 pandemic, and have been further compounded by labor shortages, a lack of building materials, and inflation. Additionally, the quick and large rise in interest rates orchestrated by the Federal Reserve has led to higher construction financing costs, limited availability of debt, and increased development costs. These combined factors have prolonged the time it takes to bring a senior housing project from the planning stages to the construction phase and eventually to its final delivery and eventual opening. 

This analysis examines how the length of time to bring a project to its completion has changed in recent years (construction duration as measured in months) across the 140 NIC MAP All Markets. 

Key Takeaways: 

• The data shows that there has been a steady and consistent increase in the time it takes to construct a senior housing community from 2015 to 2023, suggesting that extended construction duration is not exclusively a post-pandemic trend. 
• Median construction durations have risen from 16 months in 2015 and 2016 to 19 months in 2019 to then 25 and 24 months in 2022 and 2023, respectively. 
• Heightened project deliveries and “oversupply” have played a role in the variability of construction durations and have contributed to a protracted construction process. 
• Fewer construction starts and extended durations of project deliveries provide short-term support for the sector’s occupancy recovery. 
• There will be a pressing need for new construction to meet future demand and adapt to evolving resident profiles and changing requirements. 
• About 41% of senior housing communities are more than 25 years old, and the population age 80 and older is expected to grow by 5.1 million by 2030, equivalent to a 35% increase. 
• Notable shifts in construction timelines are not uniform and vary widely by region. 

Methodology: 

NIC Analytics conducted an in-depth analysis to examine the length of time required to build a senior housing property, i.e., the construction duration (in months) across the 140 NIC MAP All Markets and explore the shifts taking place in construction timelines across different regions. This analysis primarily focuses on new property developments and captures a minimum of 83 construction completions annually, spanning the period from 2015 to 2023. 

The construction duration represents the timeline from the moment the community broke ground to the point when the community officially opened. This analysis uses the community type designation. Senior housing communities captured in this analysis are independent living, assisted living, memory care, and continuing care retirement communities (CCRCs). Note that nursing care communities are not included in this analysis. 

Prolonged Construction Duration for Senior Housing: A Post- Pandemic Challenge? 

The exhibit below depicts the distribution of community construction duration in months, from 2015 to 2023, by year of opening, and demonstrates a clear and consistent trend of increasing construction durations over the time period, with a noticeable increase since the onset of the pandemic in 2020. 

The analysis also reveals that the extended construction duration is not exclusively a post-pandemic trend. Even prior to the pandemic, particularly from 2016 to 2020, construction durations were on the rise. This trend was largely attributed to a period of heightened project deliveries. 

During the delivery boom from 2016 to 2020, the senior housing market saw a surge in new project completions, causing a temporary oversupply of senior housing units, a moderate absorption-to-inventory velocity (AIV ratio) falling below the AIV threshold, and a decline in occupancy rates. This in turn led to a protracted construction process. Challenges stemming from the pandemic, high interest rates, and other economic factors only contributed to the observed prolonged construction duration. 

The median construction durations have consistently risen since 2015, from 16 months in 2015 and 2016 to 19 months in 2019, to then 25 and 24 months at their peak in 2022 and 2023, respectively. However, construction durations are not uniform. The analysis highlights a wide range (Interquartile range, IQR) in construction durations within the senior housing sector, where some projects are completed relatively swiftly, while others take longer to reach completion. Specifically, for the senior housing projects delivered in the last three years (2021- 2023), 25% of senior housing communities were completed in less than 20 months (Quartile 1, Q1), while another 25% took more than 30 months for delivery (Quartile 3, Q3). 

The variability in construction durations – influenced in part by factors such as community type and size – also highlights the differences in access to capital and financing within the senior housing sector. Notably, even amidst the challenges posed by the pandemic, elevated interest rates, increased development costs, and economic uncertainties, there remain senior housing operators who retain the ability to successfully secure financing and complete projects within reasonable and efficient timeframes. 

While construction starts plummeted in recent years and some projects took longer to complete, providing short-term support for the sector’s occupancy recovery, there will be a pressing need for new construction to meet future demand and adapt to evolving resident profiles and changing requirements. Notably, approximately 41% of senior housing communities are more than 25 years old. Additionally, the U.S. population aged 80 and older is projected to grow by 5.1 million by 2030, a 35% increase, according to U.S. Census 2022 projections. 

Separately, the 1Q 2023 NIC Lending Trends report points to a cautious lending climate, with a notable slowdown in construction requests and issuance of debt financing new construction for senior housing. The survey indicated that lenders are responding to these changing conditions by focusing on strong sponsorship and strong credits. This trend reflects a reaction to a jump in the SOFR and 10-year Treasury rates, lower loan-to-value (LTV) ratios, tighter spreads, leaner proceeds, and higher equity requirements. Additionally, new construction loan closings for senior housing remained notably weak in the first quarter of 2023 compared to historical standards, with only two other periods in the time series matching this low level — the third quarter of 2022 and the first quarter of 2021. 

Extended Delivery Times for Senior Housing Projects Compared to the Pre-Pandemic Era, with Regional Timeframe Variations 

The exhibit below shows the distribution of construction durations (in months) for senior housing communities by region. It provides a comparison of project completions in the three years preceding the pandemic (2017-2019) with the three years following the onset of the pandemic (2021-2023). 

Prior to the pandemic (2017-2019), senior housing construction durations displayed regional variations. In the post-pandemic era (2021-2023), we observed notable shifts in construction timelines. However, these changes are far from uniform and vary widely by region. 

The Mountain Region stands out with a notable increase in median construction duration, rising by 10 months from 19 to 29 months when comparing the pre-pandemic and post-pandemic periods. This is followed by the Northeast, with an increase of 9 months (from 17 to 26 months), and the Pacific, showing an increase of 8 months (from 16 to 24 months). Notably, these regions exhibited some of the shortest median construction durations in the three years leading up to the pandemic, whereas, in the last three years (2021-2023, post-pandemic), their median construction durations ranked among the highest in the country. 

Conversely, the West North Central region sustained a relatively steady median construction duration, with merely a 3-month difference between the two periods, shifting from 18 to 21 months. The West North Central region had the shortest median construction duration across all regions in the most recent three years. In the Southeast and Southwest, although there were relatively small increases in construction duration during the last three years, at 26 and 24 months, respectively, they still stand comparably high in contrast to the overall construction durations seen in the pre-pandemic era. 

In summary, the data suggests a widespread increase in construction durations across all regions during the post-pandemic era. The widening of the interquartile range reflects increased variability and broader shifts in construction timelines. These changes have been primarily attributed to disruptions in the supply chain earlier in the pandemic and more recently to labor challenges, inflation, increases in construction wages, and higher interest rates, collectively impacting various facets of construction financing, elevating development costs, and impeding the pace of construction starts and completions. 

In future publications, NIC Analytics will explore units under construction, comparing the Great Financial Crisis with the pandemic era and examining construction in the pipeline across U.S. regions and senior housing community types. 

The aim of this analysis, along with the comprehensive work conducted by NIC Analytics, extends beyond highlighting differences in construction duration and providing comparisons between the pre- and post-pandemic eras. The core message is to increase transparency and highlight that short-term challenges bolster the sector’s resilience, as demonstrated in recent years. Obstacles can spark innovation, ultimately leading to enhanced access and choice for the older adults of today and in the future. 

Looking ahead, the senior housing sector is at the precipice of transformative change. The fundamentals are evolving, with favorable demographic trends but a “higher-for-longer” interest rate environment, and those operators who can assess and embrace these changing trends, adapt with agility, and drive innovation will undoubtedly experience remarkable growth in the future. 

Data from the recently released 3Q 2023 NIC MAP Vision Actual Rates Report showed that the pace of growth in all rates for all care segments (independent living, assisted living, and memory care) maintained near record highs observed since the onset of 2023 for the data contributors to this data collection. In the recently released report, monthly data of actual rates and leasing velocity are presented through September 2023, including data on rate discounting and move-in/move-out trends. Key takeaways from the report, specifically from the Segment Type report, are presented below. Care segments refer to the levels of care and services provided to a resident living in an assisted living, memory care or independent living unit.  

The year-over-year pace of growth in all rates for all care segments maintained near record highs observed since the onset of 2023.

• For the independent living care segment, the third quarter continued to show growth in all rates with an 8.0% year-over-year increase in asking rates and a 9.2% increase in in-place rates in September 2023. Throughout the third quarter, the initial rate held fairly steady around the $3,500 mark, but slightly below what was observed in the second quarter of 2023. Despite this slight dip in July, August and September, the September 2023 initial rate was 5.2% above year-earlier level.
• The assisted living care segment experienced similar or slightly lower year-over-year increases compared to independent living. The third quarter ended with a 7.9% year-over-year increase in September 2023 in both asking rates and in-place rates, which stood at $6,190 and $6,004, respectively. The initial rate for assisted living also grew compared to one year ago, increasing by 5.4%, a figure fairly similar to what was observed for independent living.
• The memory care segment showed the largest year-over-year increase in initial rate among the three care segments, with 7.2% in September 2023.

Discounts for the third quarter were greatest within the independent living segment.

• When comparing the asking rate to the initial rate for the independent living segment, on average during the third quarter, discounts were roughly 12% off the asking rate, equivalent to 1.5 months on an annualized basis. This compares to an average discount of 8% for the assisted living segment (1 month) and 9% for the memory care segment (1.1 months).

The pace of move-ins continues to outpace move-outs across all segment types, bolstering ongoing occupancy recovery.

• The pace of move-ins for the independent living segment for each month of the third quarter averaged around 2.5%. During the month of August, the move-in percentage was 2.7%, the highest percentage since July of 2021. The percentage of move-outs across the third quarter hovered between 1.9-2.0%, the lowest rates observed since early/mid-2022. The pace of independent living move-ins to move-outs during the third quarter was greatest across all of the care segments.
• The percentage of third-quarter move-ins for assisted living maintained a fairly similar percentage as much of 2023, averaging 3.4%. This contrasts with an average pace of move-outs of 2.9%. The gap between the move-ins and move-outs, with 0.5pps on average during the third quarter, is the greatest positive gap since early/mid 2022.
• The memory care segment showed a similar average positive gap of 0.5pps between move-ins and move-outs during the third quarter. The move-in and move-out percentages (3.6% and 3.2% on average, respectively) for the third quarter. It should be noted, however, that for the third quarter, the move-in percentages were among the lowest observed thus far in 2023. Similarly, the move-out percentages for the third quarter were among the lowest recorded since the second quarter of 2022.

Additional key takeaways are available to NIC MAP Vision subscribers in the full report. 

NIC MAP Vision continues to work to onboard new data contributors and is dedicated to reporting more metros. It is only with the support of Actual Rates data contributors and officially certified Actual Rates software partners that expanded metro-level reporting is now available. For more information on which metropolitan markets are now available to NIC MAP Vision subscribers, please contact a product expert at NIC MAP Vision today.  

About the Report 

The NIC MAP Vision Seniors Housing Actual Rates Report provides aggregate national data from approximately 300,000 units within more than 2,700 properties across the U.S. operated by 35 to 40 senior housing providers. The operators included in the current sample tend to be larger, professionally managed, and investment-grade operators as we currently require participating operators to manage 5 or more properties. Note that this monthly time series is comprised of end-of-month data for each respective month, and that the set of properties included in each month’s data set is subject to change. The sample is not “same store,” and occupancy is inclusive of newly opened properties in lease-up. NIC MAP Vision is working on including same-store rate metrics in a future release. 

Interested in Participating? 

The Actual Rates Data Initiative is an effort to expand senior housing data and we are looking for operators who have five or more properties to participate. NIC MAP Vision has expertise in extracting data from industry leading software systems, such as Yardi, PointClickCare, Alis, MatrixCare, Aline, Vitals, Move-N, and Eldermark and can facilitate the process for you.  

Operators contributing data to the actual rates report receive a complimentary report which allows them to compare their own data against national and metropolitan market benchmarks. In addition to receiving a complimentary report, your organization benefits through: 

• More informed benchmarking, strategic planning, and day-to-day business operations, 
• Increased transparency, aligning with other commercial real estate assets in terms of data availability,
• Saved time, Actual Rates data is collected electronically directly from operators’ corporate offices, removing the need for telephone calls to individual properties, and 
• Enhanced investment and efficiency across the sector. 

Visit NIC Map Vision’s website for more information. 

NCREIF Performance Report Q3 2023 

The senior housing sector posted a total return of -1.15% in the third quarter of 2023, down from a positive total return of 0.48% in the prior quarter. Short-term total returns for senior housing slightly outperformed the broader NPI, which posted a total return of -1.37% in the third quarter. Positive income returns for senior housing were outweighed by negative appreciation, driving negative total returns for the quarter. The broader NPI in the third quarter posted a similar performance, with negative appreciation more than offsetting positive income returns. 

The senior housing income return in the third quarter was 0.99%, in line with the apartment sector (0.99%) and stronger than the industrial sector (0.88%), but below the overall NPI (1.07%). The senior housing appreciation (capital/valuation) return was negative for the fifth consecutive quarter at -2.13%, the lowest appreciation return since the second quarter of 2020, but slightly better than the apartment sector’s appreciation return of -2.40%. Overall, current economic and capital market conditions drove negative appreciation returns in all sectors. Further, many investors have reduced their appreciation expectations for senior housing as the sector has not yet recovered to its pre-pandemic occupancy rate. The appreciation return is the change in value net of any capital expenditure incurred during the quarter.   

On a longer-term basis, the 8.70% annualized ten-year return for senior housing was the strongest of the main property types, except for industrial (14.80%), and outperformed the NPI ten-year annualized total return of 7.40%. Income returns for senior housing (5.03%) surpassed the NPI (4.58%), as did the appreciation return (3.56% vs 2.73%). 

The performance measurements cited above for senior housing reflect the returns of 214 senior housing properties valued at $11.39 billion in the third quarter. This was the highest property count in the NCREIF time series for senior housing, while market value was down slightly from a high of $11.47 billion in the prior quarter due to negative appreciation returns in the third quarter. It is notable that the number of properties tracked by this index has grown significantly since the beginning of the pandemic, up from 134 properties in the first quarter of 2020 that were valued at $6.3 billion. The additional properties may be influencing the overall performance returns of the index. 

Third quarter 2023 market fundamentals data for senior housing showed a continued recovery in senior housing occupancy rates in the 31 Primary Markets, according to NIC MAP^® data powered by NIC MAP Vision, as demand for senior housing units outpaced new supply during the third quarter. As a result, the occupancy rate for senior housing stood at 84.4%, up 0.8 percentage points from the prior quarter and 6.6 percentage points from its low point, but still 2.7 percentage points below its pre-pandemic level of 87.1% in the first quarter of 2020. Overall, the relatively steady improvement in market fundamentals against a backdrop of significant volatility in other parts of the economy illustrates the needs-driven demand among older adults for housing and care that the senior housing industry continues to meet. 

Source: Third Quarter 2023 NCREIF Performance Report, NIC Analytics

• Senior housing stabilized occupancy will soon mark its tenth quarter of positive growth, the longest period of uninterrupted gains since NIC and NIC MAP Vision began reporting the data in 2005. 
• Compared to pre-pandemic times, the year-over-year inventory growth has remained relatively modest, with rates for independent living hovering around 1.0% to 1.7% since October 2021 and for AL since June 2022. This subdued pace is partly due to fewer construction starts and extended durations of project deliveries in recent years.  

According to intra-quarterly NIC MAP® data released by NIC MAP Vision, the senior housing stabilized occupancy rate for the NIC MAP Primary Markets increased to 86.1% in the November 2023 reporting period, up 0.1 percentage points (pps) from October 2023 and 0.6pps from September 2023, on three-month rolling basis. From its pandemic record low of 80.2% in June 2021, senior housing stabilized occupancy increased by 5.9pps but remained 3.2pps below pre-pandemic March 2020 levels of 89.3%.  

By Majority Property Type. At 87.4%, the stabilized occupancy rate for majority independent living (IL) properties for the NIC MAP Primary Markets increased by 0.2pps from October 2023 and 0.5pps from September 2023, on a three-month rolling basis, but remained 3.7pps below March 2020 levels. For majority assisted living properties (AL), the stabilized occupancy rate for the NIC MAP Primary Markets was up 0.1pps to 84.8% from October 2023 and 0.7pps from September 2023 but still 2.5pps below March 2020 levels.   

Inventory Growth. From year-earlier levels, the inventory of IL in the NIC MAP Primary Markets increased by 1.4% or 5,023 units in the November 2023 reporting period, 0.3pps lower than that of AL (1.7%).  

Compared to pre-pandemic times, the year-over-year inventory growth has remained relatively modest, with rates for IL hovering around 1.0% to 1.7% since October 2021 and for AL since June 2022. This subdued pace is partly due to fewer construction starts and extended durations of project deliveries in recent years.  

Stabilized Occupancy Recovery Across Select Metropolitan Markets. The stabilized occupancy rate for majority independent living properties increased or remained stable in 24 of the 31 Primary Markets in the November 2023 reporting period compared with October 2023. At 88.7%, Portland independent living stabilized occupancy saw the largest increase, up 0.9pps from October 2023. Cincinnati independent living stabilized occupancy fell by 1.2pps in November 2023 to 86.6%, marking the largest decline from October 2023.  

In November 2023, Boston, Baltimore, Minneapolis, Pittsburgh, San Jose, and Washington, DC reported relatively higher IL stabilized occupancy rates – at or exceeding the 90.0% mark.  

For majority assisted living properties, the stabilized occupancy rate increased or remained stable in 26 of the 31 Primary Markets in November 2023. At 84.2%, Seattle assisted living stabilized occupancy saw the largest increase, up 1.0pps from October 2023. The AL stabilized occupancy rate in Chicago had the largest decline and fell 1.3pps from October 2023 to 82.4%.  

Portland and Tampa reported the highest AL stabilized occupancy rates among the Primary Markets at 90.6% and 90.0%, respectively.  

Keep track of the timely review of the sector’s market fundamentals and trends. The NIC Intra-Quarterly Snapshot monthly publication, available for complimentary download on our website, continues to provide a powerful and closely watched means to stay ahead of industry trends.  

The December 2023 Intra-Quarterly Snapshot report will be released on our website on Thursday, January 4, 2024, at 4:30 pm.    

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