Seniors housing occupancy rates still remain low despite an apparent slowdown in new development.
Whether you look at the total market, or simply the stabilized properties, second quarter occupancy took a small dip, according to recent numbers from NIC. Truth be told, I was hoping for a slight increase after a relatively modest flu season, even though it did seem to linger. But NIC’s numbers are at the midpoint of the quarter, so things could be more positive by now.
It is still assisted living that is experiencing the continuing problems, dropping 20 basis points sequentially to 87.7% for stabilized communities, but 85.1% when the rest are included. One could look on the bright side and say those empty units represent opportunity for increased cash flow when they fill. But construction starts as a percent of inventory, while declining, are still above where the market needs them to be.
Independent living occupancy rates continue to stay above 90% but, according to NIC, showing a little more weakness. More troubling is that IL absorption as a percent of supply has declined from 1.7% a year ago to just 1.2%. It looks like all of that decline has come from secondary markets, as the 31 primary markets have remained at 1.8% over the past year.
The REITs will start reporting towards the end of the month, followed by the few remaining operating companies. That will hopefully provide some clarity as to where we are really going.