Senior Living Occupancy Reaches 83% in Q4 as Industry Sees Most-Ever Occupied Units

A new occupancy report issued Thursday shows key markets once again gained occupancy for a sixth straight quarter to end 2022, according to the National Investment Center for Seniors Housing (NIC).

In the fourth quarter of 2022, occupancy increased nearly 1% (0.9%) from 82.1% in the third quarter to 83% in Q422, NIC MAP Vision data shows. That figure is up 5.2% from the pandemic occupancy low of 77.8% in the second quarter of 2021, a sign that the post–Covid-19 recovery is steadily marching forward.

The industry also hit a new high watermark for total occupied units in the fourth quarter of 2022. As of the end of the quarter, the total number of occupied units exceeded 574,900, an increase of about 7,000 units over its previous record high in the first quarter of 2020.

“The most recent quarter is a continuation of positive fundamentals,” NIC Senior Principal Caroline Clapp told Senior Housing News. “We’re not yet back to pre-pandemic levels, but it’s encouraging to see the strong increase in occupancy this quarter.”

Overall, Clapp said the gains have been driven by strong demand. Looking ahead, impending demographic shifts will push more people into senior living, leaving the demand side of the story “unchanged,” she added.

The industry also has seen its staffing pressures ease somewhat, with slower wage growth, according to recent NIC executive survey results. That has given operators more room to breathe.

“We see a little bit of easing in expenses and staffing issues and I think that could be a positive for 2023,” Clapp said.

Demand has rebounded more strongly for assisted living than independent living, according to the NIC MAP Vision data. While assisted living occupancy still has not reached pre-pandemic levels, that is to do with new inventory added during the pandemic.

Of the 31 primary NIC MAP Vision metro markets, Boston and Baltimore saw the highest occupancy in the third quarter, registering at 88.9% and 86.7%, respectively; while Cleveland (79.4%), Atlanta (79%) and Houston (77.9%) brought up the rear.

New inventory added during the pandemic has stopped the industry from reaching pre-pandemic occupancy figures. Approximately 3,300 units were added within 31 NIC MAP Primary Markets during the fourth quarter.s.

Higher demand and slow inventory growth was a consistent trend in 2022 and fewer than 11,000 units were added within NIC MAP Primary Markets last year, the weakest inventory growth since 2014. But demand remains high and resulted in occupancy rising 2.8% last year. 

The slow pace of construction of senior living units was also carried over into the fourth quarter as NIC primary markets added 3,013 units in 4Q22. Total units under construction equaled 35,719 units, the fewest units under construction since 2015, the occupancy update states.

Construction starts were weaker in 2022 compared to 2021, but stronger than in 2020. For all of 2022, total starts encompassed 14,665 new units across primary markets that can be attributed to rising interest rates and a tighter lending environment.

With higher interest rates to remain in the early months of this year, NIC Chief Economist Beth Mace said slower development pipelines were likely to continue across the industry and impact inventory growth which would ultimately spur higher occupancy rates.

After two years of substantial rate growth, operators appear similarly emboldened and able to net higher rates in the future. That was reflected in NIC data, with the center reporting that operators increased rates 4.9% on a year-over-year basis in the fourth quarter, the largest increase since NIC Map Vision data was reported starting in 2006.

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