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Pent-Up Demand Pushes Q3 Senior Living Occupancy to 80.1%, ‘Portends a Good Future’

The senior living industry added 1.4% of average occupancy in the third quarter of 2021, according to the latest data from NIC MAP Vision.

The senior living industry hit an average occupancy of 80.1% in 3Q21, representing the first gain in occupancy for NIC MAP’s 31 primary markets since the pandemic began. Pent-up demand was a big reason why, according to NIC Chief Economist Beth Mace.

“The increase in absorption was strong, the largest increase we’ve seen since NIC MAP Vision started reporting the data in 2006,” Mace told Senior Housing News. “I think that speaks to pent-up demand that we’ve seen in the sector … and it portends a good future.”

More modest inventory growth also helped operators gain occupancy in the quarter.

Senior housing inventory increased by 3,441 units in 3Q21, representing the smallest unit count increase since the first quarter of 2019, according to NIC MAP Vision. And, senior housing construction starts amounted to 1.9% of existing inventory in the third quarter on a rolling four-quarter basis.

“That paints a picture of a slowdown in inventory for a while, which should help support further improvements in occupancy,” Mace said.

Mace added that the more modest number of construction starts has led to a “window of limited inventory growth” that senior housing leaders should take note of.

“This is a fairly small window because I think that there will be a lot of interest from developers to continue to break ground on new deals and new properties,” she said. “You’ll have less competition today than you might two years from now.”

Rent growth continued to be weak in the third quarter of 2021 — evidence that many senior living providers still lack pricing power amid depressed occupancy.

“Occupancy rates are so low that it’s hard to achieve any kind of revenue or rent growth, and expenses are up because of labor … and because of insurance,” Mace said. “That would suggest that, for some operators, times are tough in terms of managing their margins.”

As is usually the case, occupancy differed among the different senior housing property types.

Average assisted living occupancy increased to 76.9% in 3Q, a gain from a pandemic low of 75.4% in the first quarter of 2021.

Independent living occupancy grew to 83.2%, up from a pandemic low of 81.8% in 1Q21.

And nursing care occupancy registered at 76.3%, which is an increase over a pandemic low of 74.1% in the same time frame.

Among the 31 primary markets, occupancy was highest in San Jose (85.9%) and San Francisco (84.5%), California; and in Portland, Oregon (84.3%).

On the flip side, the lowest occupancy rates were seen in  Houston (74.8%), Cleveland (75.5%) and Atlanta (75.8%).

The industry is still well below its pre-pandemic occupancy peaks despite its recent gains, and providers should hold off from declaring victory as the pandemic is sure to stick around for a while longer. But, Mace believes the industry is in a better place now than it was just one year ago.

“Residents are vaccinated, a significant amount of staff are vaccinated and have the safety and infection control protocols in place,” Mace said. “Lessons have been learned and they have been applied, and I think that that bodes well.”

The post Pent-Up Demand Pushes Q3 Senior Living Occupancy to 80.1%, ‘Portends a Good Future’ appeared first on Senior Housing News.

Source: For the full article please visit Senior Housing News

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