NIC wrapped up its virtual conference this week, and it’s safe to say that those in attendance got a good education on what it’s like to close a deal during the pandemic, to operate communities safely and successfully, and (hopefully) when business will be back to normal. At the end of the conference, NIC also released its third-quarter occupancy numbers, and they showed the industry has a long road to recovery. Across the 31 primary markets, seniors housing average occupancy fell from 84.7% in the second quarter to 82.1% in the third quarter, a drop of 260 basis points. That followed a 280-basis point decline in the second quarter.
Clearly, COVID-19 and the resulting lockdowns attributed the most to the decline, as many communities simply cannot facilitate the number of tours and move-ins as they could before, regardless of how demand may have changed. NIC’s press release also pointed out that the independent living market saw a considerable increase in inventory, the largest seen since early 2009. So, while construction starts has certainly slowed in the wake of the pandemic, those projects started 18 months to two years ago when the market was flush with capital are opening now and will need to fill up. That could dampen the census recovery for many communities in overbuilt markets.
The effects of the pandemic also have disparately affected communities across the country, with varying severity of lockdown measures and outbreaks of the virus in some communities but not in others. According to the NIC numbers, about 34% of seniors housing properties in the primary markets reported occupancies above 90%, while 36% reported occupancies below 80%. Assisted living communities have also taken the brunt of census challenges compared with independent living, with a 2.9% decrease to 79.1% versus a 2.4% decrease to 84.9%, respectively. The assisted living market did start at a lower level, but does experience a higher rate of natural attrition outside of COVID-19 anyway.
All of this goes back to the question of when we as an industry will return to normal, if ever. And what can we learn from history to help predict the recovery curve? That is what we will be examining in the November issue of The SeniorCare Investor.
