NIC released its latest seniors housing occupancy update for the 31 NIC Map Primary Markets, and fourth quarter 2024 census has hit another post-pandemic occupancy high. Overall seniors housing occupancy rose to 87.2%, up 70 basis points from 86.5% in the third quarter. Separated out by property type, majority-independent living properties were 88.6% occupied in Q4, and majority-assisted living properties were 85.7% occupied. While the Primary markets averaged 87.2%, the 99 Primary and Secondary markets combined averaged 87.7% and the remaining 41 markets to round out the 140 total markets that NIC tracks averaged 88.5%. Overall, occupancy was 87.8% for all 140 markets.
The last time overall occupancy surpassed 87.0% was the first quarter of 2020, when it was 87.7% (it dropped to 84.9% in the second quarter of 2020). At that time in Q1:20, IL occupancy was 89.9% and AL was 85.3%, so the IL market is currently in a weaker place, while AL is in a slightly stronger census position today. It is important to note that the seniors housing industry was not thriving, occupancy-wise, in the years before the pandemic. Overdevelopment, particularly in the assisted living sector, had chipped away at average national census, impacting staffing costs and operating margins as well.
So as we “return to pre-pandemic occupancy levels,” we as an industry should be aiming higher, especially given the staffing and expense pressures currently affecting seniors housing operators. Capital costs and limited liquidity for new construction loans will keep development levels relatively low in the next couple of years, helping to push national census levels. Indeed, NIC reported that, “there were fewer than 22,000 senior housing units under construction in the fourth quarter, which was the lowest level since the first quarter of 2014.” But there are also the issues of affordability, rising move-in ages, consumer preferences and new technologies that could temper growth. And again, it is the absolute level of cash flow that matters to owners, operators and lenders, so increases to census have to correlate with increases in profitability.
Boston (91.0%), Baltimore (89.9%), and Tampa (89.8%) once again had the highest occupancy rates of the 31 NIC MAP Primary Markets, while Atlanta (83.9%), Houston (83.5%), and Las Vegas (82.9%) recorded the lowest. Annual rent growth was a healthy 4.1% in the fourth quarter of 2024, down 10 basis points from 4.2% in Q3:24. And average skilled nursing occupancy rose by 70 basis points from the previous quarter to 85.3% in Q4:24, which is also nearing its prepandemic level.
