Press "Enter" to skip to content

New Inventory Kept Senior Housing Occupancy at Record-Low Level in Q2 2021

Average senior housing occupancy in large metro markets did not inflect upward in the second quarter of 2021, largely due to a steady stream of new community openings.

Occupancy hit a record-low of 78.7% during the second quarter of 2021, according to the latest NIC MAP Vision figures. That is largely unchanged from the first quarter of 2021, when average occupancy registered at a then-record-low of 78.8%.

The driving force behind the latest occupancy report wasn’t demand, which was “measurably up” in the second quarter, according to NIC Chief Economist Beth Mace. Instead, it was the fact that senior living inventory grew by a robust 4,300 units in the second quarter in the 31 primary markets tracked by NIC MAP Vision, outpacing demand. By comparison, the industry added about 5,100 units in the first quarter of 2021.

“That was a bit of a surprise,” Mace told Senior Housing News. “We had anticipated that we would start to see a slowdown in inventory growth based on weaker starts that we saw in the post-pandemic period.”

Still, much of that inventory growth is due to projects that were initiated in the months before the pandemic, Mace said.

The pace of new development and construction projects has slowed this year, and if current trends hold, that could portend industry-wide occupancy gains down the road as absorption ticks back up.

The 2Q21 release represents the first “positive quarterly absorption”  – meaning the number of units leased on a net basis – since the first quarter of 2020, “and the most positive absorption since 2019,” according to NIC.

“Of course, the caveat is that we don’t have something like the Delta variant, or anything else that might upset the applecart,” Mace added.

Although occupancy was anemic in primary markets in the second quarter, it was stronger in the 67 secondary markets NIC tracks. Operators in those markets went from an average occupancy rate of 82.8% in the first quarter of this year to 83.5% in the second quarter.

As in the primary markets, inventory growth was the biggest reason for the trend. Unlike in hot development markets such as Houston or Atlanta, inventory growth in secondary markets was “relatively tiny, and demand surpassed it significantly,” Mace said.

“Primary markets didn’t see the same improvement in occupancy because the primary markets had more inventory growth,” she added.

Among senior living providers, NIC sees growing optimism as vaccination rates climb and new cases of Covid-19 plummet. That was evident in the second quarter of 2021, when 47% of senior housing properties in the NIC MAP primary markets reported an increase in occupancy. During the height of the pandemic, that number was just 22.5%.

“We’re cautiously optimistic,” Mace said. “On the demand side of the formula, it looks like things are beginning to turn the corner.”

The post New Inventory Kept Senior Housing Occupancy at Record-Low Level in Q2 2021 appeared first on Senior Housing News.

Source: For the full article please visit Senior Housing News

Be First to Comment

    Leave a Reply

    %d bloggers like this: