Senior Housing Occupancy to Reach Pre-Pandemic Levels This Year

NIC anticipates senior housing occupancy recovery to reach pre-pandemic levels in the second half of 2024 and sees owners and operators soon determining when to “jump start” new construction to meet demand.

The current environment of robust absorption coupled with relatively moderate new inventory is driving the momentum, said senior principal Caroline Clapp in the report.

The senior housing occupancy rate for the 31 NIC MAP Primary Markets increased 0.8 percentage points from 84.3% in Q3 2023 to 85.1% in Q4, according to NIC MAP Vision.

In fact, Q4 represented the tenth consecutive quarter of occupancy gains. That rate has increased 7.3 percentage points from a pandemic-related low of 77.8% in Q2 2021 and now sits less than two percentage points below the pre-pandemic level of 87.1% in Q1 2020.

However, while occupancy and absorption levels are trending upward, higher costs of capital and challenged lending environment conditions continue to weigh on new supply, according to NIC.

Senior housing inventory for primary markets grew by 0.4% (or 2,920 units) from the prior quarter. Year-over-year inventory growth was 1.4%, near its smallest year-over-year increase since 2012.

The highest occupancy rates were in Boston (90.7%), Baltimore (88.6%), and Minneapolis (88.1%). Houston (79.3%), Atlanta (81.8%), and Las Vegas (82.1%) recorded the lowest.

Tony Cassie, Managing Director of Investment Sales at Walker & Dunlop, tells GlobeSt.com that the industry is seeing occupancy gains across all markets and care levels.

“While the majority of occupancy increases are in newer, highly amenitized communities, even smaller, older vintage properties are seeing a bounce back to pre-COVID levels,” Cassie said.

“The reason is that most of the industry is needs-driven by the absence of COVID-era lock-down rules, and many new projects have either been delayed or scrapped altogether. We expect that occupancy will continue to increase as the capital markets environment further prevents the addition of new supply.”

Markets throughout Florida continue to experience strong lease-ups of her company’s communities, according to Julie Ferguson, executive vice president, senior living, Ryan Companies.

She said that two projects delivered in late 2023 in southwest Florida have experienced above-normal pre-deposits as well as move-ins during the first 60 days and rental rates for these communities are 6% to 10% above proforma expectations.

Other markets are performing well too, according to GlobeSt.com contacts.

Peter DeMangus, Chief Business Development Officer, Solterra Companies, said he continues to see increased prospective resident leads within its internal data across all its senior communities in the metropolitan Phoenix market.

And Danette Opaczewski, COO & EVP, Resident Experience, Revel Communities, tells GlobeSt.com that two Revel communities stabilized in the Las Vegas and Boise, Idaho, markets last year and she anticipates that three more communities will stabilize in 2024 in the Seattle metro area and Colorado Springs markets.

She added that Revel Folsom, located in the Sacramento suburb of Folsom, opened in 2022 is performing particularly well with occupancy in the mid-60s.