The recent NIC MAP data on occupancy, development and rate growth can be interpreted in many ways.
So, what are we really to make of the NIC MAP data for the first quarter? Most of the data was viewed positively, despite a smallish decline in occupancy from last year’s fourth quarter. Absorption levels have been increasing, according to the data, and construction starts as a percent of existing supply declined from both the fourth quarter and the year-ago quarter. Does this mean that the much-feared over-building threat has dissipated? Hardly, as one quarter’s worth of data does not present a strong trend, and it is possible the small decline in starts was related to the chaos in the markets from late last year until recently.
But a lot of people seemed to focus on the relatively strong “rate” growth of 2.7% for assisted living and 3.1% for independent living. And even with weak projected occupancy growth through 2016, it was the rate growth that could jumpstart cash flow, or so the theory goes. The problem we have is that the stated growth in rates is based on published rates, not what is actually collected. We still hear many complaints of price discounting to move the needle on occupancy. So some of the rate “growth” could be higher published rates, allowing the community to discount them to fill the unit, with the customer thinking they got a deal. I really don’t think we are out of the woods with occupancy, real rate growth and development, at least not yet.