Press Room – 2010 NIC Press Releases
SENIORS HOUSING OCCUPANCY UNCHANGED, UNITS UNDER CONSTRUCTION LEVELING
NIC MAP Data Also Shows Fairly Steady Rent Growth
FOR IMMEDIATE RELEASE: October 27, 2010
Contact: Renee Tilton, (410) 626-0805 or rtilton@crosbymarketing.com
Annapolis, Md. – The occupancy rate for seniors housing was unchanged this quarter, and the number of units under construction appears to be leveling, according to NIC MAP, a data and analysis service of the National Investment Center for the Seniors Housing & Care Industry (NIC). The data also showed little change in the rate of rent growth for seniors housing but a slight increase in private pay rents for skilled nursing.
The average occupancy rate for seniors housing properties in 3Q10 was 87.7%, which was unchanged from 2Q10 and suggests that occupancy has stabilized. Since the second quarter of 2009, seniors housing occupancy rates have been trending within a tight range between 87.5% in 1Q10 and 88.1% in 3Q09.
NIC MAP data also reveals divergent trends in occupancy rates between independent living and assisted living properties. The independent living occupancy rate was 87.1% in 3Q10, down 30 basis points from the previous quarter. In contrast, assisted living occupancy was 88.7% in this quarter, which was up 40 basis points from 2Q10. “While independent living occupancy rates are continuing to establish new cyclical lows, assisted living occupancy rates are recovering from recent lows,” said Chuck Harry, research director – NIC.
Annual rent growth for seniors housing in the third quarter of 2010 was 0.7%, which is little changed in comparison to the previous quarter when it was 0.8%. One year ago, in 3Q09, annual rent growth was 2.0%. “Rent growth, while still positive, has slowed and reflects the challenging leasing environment that many operators are in today,” said Harry.
For seniors housing properties, annual absorption was 1.2% in the third quarter of 2010. This is lower than 1.7% in the second quarter of the year, but does reflect higher levels than in 2008 and 2009. From 1Q08 to 4Q09, the annual pace of seniors housing absorption was below 1%. 3Q10 marks the third consecutive quarter where annual absorption has been above 1%.
The seniors housing inventory grew at an annual rate of 1.7% in 3Q10, which is a slowdown from the levels seen a few years ago. For more than three years prior to 2Q10, inventory was growing in excess of 2% annually. “The current pace of absorption and the emerging slowdown in inventory growth is revealing a more balanced supply/demand picture as compared to 2008 and 2009,” said Harry.
Construction activity for seniors housing declined slightly in 3Q10 to 2.0%, and it appears to be leveling. The data shows that there is new construction activity, but new construction starts are largely replacing the units opening on a quarterly basis.
The skilled nursing occupancy rate was 88.5% in 3Q10, down just 0.1% from 2Q10 and continuing the trend of marginal declines for the past four years. In contrast to the seniors housing rent growth trend, skilled nursing private pay rents grew 3.3% annually this quarter, reflecting continued growth. This sector’s inventory also showed a slight negative decline on an annualized basis of 0.1% in 3Q10, and annual absorption declined 0.7%.
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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 properties 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.