Skilled Nursing Edges Toward Balance as Closures Ease
Skilled nursing facility inventory continued to decline in June on a year-over-year basis, though the pace of contraction has slowed, according to Marcus & Millichap’s second-half skilled nursing market report. An average of about 1,000 beds were taken offline per quarter over the past year, compared with 2,200 per quarter between 2021 and 2023, suggesting that facility closures are tapering.
Net absorption remained positive but softened slightly, pushing occupancy up 190 basis points year over year to nearly 86%—a level consistent with late 2019. With the development pipeline historically tight, the report projects further incremental gains in occupancy. As of mid-2025, the number of units under construction matched the lowest quarterly total recorded in 2023.
Staffing shortages continue to pose operational challenges and, in some cases, have contributed to closures. However, the sector received a boost from an April federal court ruling that vacated the national minimum staffing mandate. The decision eliminated 24-hour registered nurse requirements and daily hours-per-resident thresholds, easing pressure on hiring and compliance.
Additional support may come from the latest federal tax and spending bill, which expands the use of college savings plans to cover vocational and professional certifications. This change is expected to strengthen the pipeline of certified nursing assistants and caregivers, the report noted.
Still, the legislation also introduces new constraints on Medicaid, potentially creating financial strain for facilities that rely heavily on the program to fund resident care.
Transaction activity in the skilled nursing sector accelerated in June, as acquiring existing facilities proved more viable than pursuing new development amid elevated construction costs. Markets in the Southwest and Mountain regions are particularly well-positioned due to strong annual absorption and heightened investment activity. In the Pacific region, trades in the $1 million to $10 million range nearly doubled, supported by solid occupancy.
Marcus & Millichap noted that deal flow could continue to strengthen as capital adjusts to a more favorable lending environment and investors are drawn to the sector’s relatively high yields.
Source: GlobeSt/ALM