NIC: Seniors Housing Occupancy Inched Upward in First Quarter
ANNAPOLIS, MD. — The occupancy rate for seniors housing across the United States climbed slightly to 88.1 percent in the first quarter of 2019, according to the National Investment Center for Seniors Housing & Care (NIC), a nonprofit organization that provides research and analytics to the seniors housing industry.
Occupancy increased 10 basis points from the previous quarter and decreased 20 basis points from one year ago. Occupancy for the first quarter of 2019 was 210 basis points below its most recent high of 90.2 percent in the fourth quarter of 2014.
“Occupancy in seniors housing properties remained stable nationally but varied greatly from market to market,” says Chuck Harry, NIC’s head of research and analytics. “Local markets can vary due to changes in local economic performance, barriers to entry such as zoning and regulations, shifting demographics, and other factors.”
Of the 31 metropolitan areas that comprise NIC’s primary markets, the highest first-quarter U.S. occupancy rates occurred in San Jose (94.1 percent) and San Diego (92.2 percent). The lowest first-quarter occupancy rates were in Houston, TX (77.1 percent) and San Antonio (77.4 percent).
NIC data show the largest occupancy increase from a year ago occurred in Las Vegas (from 86 percent in the first quarter of 2018 to 87.9 percent during the same period in 2019). The largest decrease occurred in Houston (from 78.9 percent in the first quarter of 2018 to 77.1 percent during the same period of 2019).
“The 17 percentage point spread in occupancy across these major U.S. markets is exceptionally wide when compared to other commercial property types,” notes Harry.
NIC data suggest a possible slowing in new seniors housing construction as the reason occupancy has stabilized after years of declines. Seniors housing construction starts during the first quarter of 2019 in NIC’s 31 primary markets totaled 4,003 units, which include 2,236 independent living units and 1,767 assisted living units. Starts totaled 19,367 units across the previous four quarters.
Data on quarterly construction starts are considered preliminary, as they often are revised in subsequent quarters as additional information becomes available.
“We continue to see strong demand for seniors housing nationally, as demand slightly exceeded inventory growth in the first quarter, albeit by a relatively small amount,” says Beth Burnham Mace, NIC’s chief economist. “At the same time, inventory growth appears to be cooling, due to a slowdown in construction starts, raising the possibility that demand for seniors housing might better align with supply later this year.”
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— Jeff Shaw