The average occupancy rate in the third quarter of 2000 was 88.7%. That number declined over the following quarters until the third quarter of 2001, when the rate stood at about 85%; the same rate for the second quarter of 2001. NIC has also found that the dampened economy is having little effect on the occupancy numbers. "I'm not saying that this is a recession-proof sector, but [assisted living] is a need-based product," NIC Executive Director Robert G. Kramer explains to GlobeSt.Com. "That kind of move is not driven by the state of the economy."

However, even if a pattern of stabilization is realized over two quarters--NIC will release its fourth quarter report by late February--construction starts for the assisted living community will not likely increase. "There will be very little growth in construction financing and, therefore, in new construction," Kramer says. "Right now the controlling factor in assisted living communities in regard to construction is the justified concern of lenders. They want to see that demand has caught up with supply." Major lenders placed $349 million in project financing for the sector in the third quarter; a $179 million decrease from the second quarter.

While there will be little funds offered for new construction, Kramer says "the lending community is going to be providing money for financial restructuring and refinancing, and redevelopment of current properties." The report surveyed statistics from 2,600 industry properties, accounting for 285,000 units.