Press Room – 2011 NIC Press Releases
Recovery of Seniors Housing Gains Traction
NIC MAP Data Also Shows Accelerated Pace of Rent Growth
FOR IMMEDIATE RELEASE: April 28, 2011
Contact: Renee Tilton, (410) 626-0805 or rtilton@crosbymarketing.com
Annapolis, Md. – The occupancy rate for seniors housing rose in the first quarter of 2011 and the pace of year-over-year rent growth also has risen, according to NIC MAP, the data and analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC). In addition, the data shows that absorption continues to rise and construction activity remains tempered. “Although there’s not complete evidence of a bounce back, almost every indicator points toward the positive,” says Michael Hargrave, vice president, NIC MAP.
The average occupancy rate for seniors housing properties in 1Q11 was 87.9%, which is 0.2 percentage points higher than the previous quarter and a 0.6 percentage point increase over its cyclical bottom of 87.3% in 1Q10. This is the fourth consecutive quarter that the occupancy rate has improved.
“Although the improvement in the occupancy rate during the previous four quarters has been nominal, it is clear that occupancy has moved past its cyclical bottom of the first quarter of 2010 and we now are one year into recovery,” says Charles Harry, research director, NIC.
In terms of the two property types that comprise seniors housing, the 1Q11 occupancy rate for assisted living properties was unchanged from the previous quarter at 88.4%, while independent living properties rose from 87.3% to 87.7% in the same time period.
The pace of year-over-year rent growth for seniors housing was 0.5% in 1Q11, rising from a flat 0.0% in 4Q10. “Rent growth has been positive throughout the downturn, but this is the first quarter since 1Q07 that the pace of rent growth has accelerated,” says Harry.
For seniors housing properties, annual absorption was 2.1% in the first quarter of 2011, its highest level since 1Q07. This also is an increase from the annual pace of 1.7% in the previous quarter and from 1.3% in 1Q10.
The pace of seniors housing’s annual inventory growth continues to slow and has reached the lowest level ever recorded in the NIC MAP database. In 1Q11, annual inventory growth was 1.3%, which is down from both 1.6% in the previous quarter and 2.6% in the first quarter of 2010.
Construction activity for seniors housing remains unchanged from the previous quarter at 1.8% of existing inventory. Although it has been trending between 1.8% and 2.1% during the past year, the number of units under construction as of 1Q11 is down 57% from its cyclical peak in 1Q08.
“The general scarcity of available construction financing has reduced construction levels and now the pace of inventory growth. As a result, increases in demand (absorption) generally are exceeding the pace of new supply, which is leading to gradual improvements in occupancy rates and allowing the industry to gain traction towards recovery,” says Hargrave.
Continuing its sideways trend, the nursing care occupancy rate was 88.5% in 1Q11, which is 0.1 percentage points higher than the previous quarter. Although this is a decline of 0.4 percentage points on a year-over-year basis, nursing care occupancy rates have remained relatively stable since 2Q10.
Nursing care’s annual inventory growth was -0.1% in 1Q11, illustrating the established trend of slowing inventory growth. For the past five years, the nursing home inventory has been shrinking at an annual rate of 0.3%, according to NIC MAP data. Private pay rents for this sector grew 3.3% on a year-over-year basis this quarter, reflecting continued improvement.
About NIC
Founded in 1991, the National Investment Center for the Seniors Housing & Care Industry is a nonprofit education and research organization providing information about business strategy and capital formation for the senior living industry. NIC is the leading provider of historical and trend data on the industry through its NIC MAP® Data and Analysis Service that tracks more than 12,000 properties on a quarterly basis in the 100 largest metropolitan markets. Proceeds from its annual conference and other events are used to fund data and research on issues of importance to lenders, investors, developers, operators, and others interested in meeting the housing and care needs of America’s seniors. For more information, visit www.NIC.org or call (410) 267-0504.