Inventory Growth Again Exceeds Demand
FOR IMMEDIATE RELEASE: Wednesday, April 12, 2017
Contact: Darlene Holmes, 443-837-2438 or communications@nic.org
ANNAPOLIS, Md. – The occupancy rate for seniors housing properties in the first quarter of 2017 averaged 89.3%, as net additions to inventory outpaced absorption of units. This represented a decrease of 0.3 percentage point from the prior quarter and was down 0.6 percentage point from year-earlier levels. As of the first quarter of 2017, occupancy was 2.4 percentage points above its cyclical low of 86.9% during the first quarter of 2010 and 0.9 percentage point below its most recent high of 90.2% in the fourth quarter of 2014.
The occupancy rates for independent living properties and assisted living properties averaged 90.9% and 87.2%, respectively, during the first quarter of 2017. The occupancy rate for independent living was down 0.2 percentage point from the prior quarter and down 0.3 percentage point from year-earlier levels. The occupancy rate for assisted living was down 0.5 percentage point from the fourth quarter and down 1.0 percentage point from year-earlier levels. Occupancy for assisted living was at its lowest level since early 2010 when it stood at 86.9%.
Seniors housing annual absorption was 2.8% as of the first quarter of 2017, up 0.1 percentage point from the fourth quarter of 2016 and up 0.2 percentage point from one year earlier. The seniors housing annual inventory growth rate in the first quarter of 2017 was 3.4%, up 0.2 percentage point from the prior quarter and its fastest pace since at least 2006.
“It was another active quarter for inventory growth, with nearly 4,800 units added to the seniors housing stock in NIC MAP’s 31 Primary Markets. At the same time, demand slowed during the quarter, as is typically the case in the first quarter due to the seasonal effects of the winter months. Some of the slowdown in net absorption may also reflect the severity of the 2016/2017 flu season as reported by the Centers for Disease Control (CDC)”, said Beth Burnham Mace, chief economist for NIC.
Current construction as a share of existing inventory for seniors housing preliminary slowed 0.3 percentage point from the prior quarter to 5.8% and was 0.7 percentage point below its recent high of 6.5% in the third quarter of 2016.
Seniors housing construction starts during the first quarter of 2017 preliminarily totaled 2,845 units, which included 1,388 independent living units and 1,457 assisted living units. On a preliminary four-quarter basis, starts totaled 18,366 units. Construction starts data is typically revised upward retrospectively in subsequent quarters as additional starts are identified.
During the first quarter of 2017, the average rate of seniors housing’s annual asking rent growth was 3.3%, down 0.4 percentage point from the prior quarter, but up from 3.1% in the first quarter of 2016. For comparison purposes, inflation as measured by the CPI was up 2.8% in February 2017 from year-earlier levels.
“Considering the continued strong inventory growth and sustained levels of construction, this solid same-store rent growth is notable. From year-earlier levels, it was fastest for independent living properties, whose asking rents increased by 3.5%, compared to the 3.0% gain seen in assisted living properties,” noted Chuck Harry, NIC’s chief of research and analytics. “Both first quarter growth rates, however, were below their respective pace of growth during the latter half of 2016.”
The nursing care occupancy rate increased to 87.2% in the first quarter of 2017 from 86.8% at the end of 2016. The nursing care annual inventory growth rate was virtually zero in the first quarter of 2017, while annual absorption was down by -0.4%. Private pay rents for the sector grew 2.7% year over year this quarter, down 0.2 percentage point from year-earlier levels.
[Note: For 1Q17 NIC MAP data specific to your local metro market, please refer to the regional key metrics charts.]
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About NIC
The National Investment Center for Seniors Housing & Care (NIC) is a 501(c)3 organization established in 1991 whose mission is to enable access and choice by providing data, analytics and connections that bring together investors and providers. For more information, visit natinvcenterdv.wpengine.com, and follow NIC on Twitter.
Since 1991, NIC has been the leading source of research, data, and analytics for owners, operators, developers, capital providers, researchers, academics, public policy analysts, and others interested in meeting the housing and care needs of America’s seniors. NIC has proudly sponsored the Seniors Housing & Care Journal, a peer-reviewed journal for applied research in the seniors housing and care field, since 1993. One of NIC’s major initiatives to further its mission is the NIC MAP® Data Service (NIC MAP). NIC MAP’s web-based suite of research and analytic tools track and report seniors housing and care data for more than 14,000 properties within 140 U.S. metropolitan markets. Established in 2004, NIC MAP creates transparency for seniors housing and care by offering accurate, unbiased, and actionable market-level data on all of the sector’s property types and care segments, including independent living, assisted living, memory care, and nursing care, as well as continued care retirement communities (CCRCs). Our data is updated quarterly, monthly, and weekly, and is inclusive of property-level inventory by unit type, sales transactions, properties under construction and in the planning phase, aggregated occupancy and rent comparables, demographics, and much more. For more information, call 410-267-0504.