15 Senior Housing Markets Now Average at Least 90% Occupancy
Demand for senior housing continues to outpace new development, pushing occupancy to its highest level in years and tightening available inventory across many of the nation's largest markets.
Sector occupancy 89.9% in the second quarter, up from 89.5% in the first three months of the year and marking the 20th consecutive quarter of gains, according to new data from the National Investment Center for Seniors Housing & Care (NIC). Fifteen of the 31 primary markets tracked by NIC MAP have now reached or exceeded 90% occupancy.
The gains come as construction remains historically subdued. Senior housing inventory expanded just 0.4% year-over-year during the second quarter, while fewer than 16,000 units were under construction nationwide. The number of occupied units increased by nearly 3,700 during the quarter to approximately 639,650.
"High occupancy rates and static construction mean fewer new housing options for older adults," Lisa McCracken, NIC's head of research and analytics, said in a statement.
She added that many operators are instead expanding wellness programming, recreational offerings and other services within existing communities to meet resident demand.
Boston posted the highest occupancy rate among primary markets at 93.3%, followed by San Francisco at 92.7% and Baltimore at 91.8%. Miami ranked the lowest at 86.2%, followed by Atlanta at 86.5% and San Antonio at 87%, though each of those cities continued to post occupancy gains.
NIC expects overall occupancy to surpass the 90% mark by the end of the year, with additional markets likely to cross that threshold as demand continues to exceed new supply.
The widening imbalance is also reshaping development strategies. Rather than concentrating on major metropolitan areas where development costs remain elevated, developers may increasingly pursue projects in secondary and tertiary markets, where construction economics can be more favorable and unmet demand remains significant, according to Arick Morton, CEO of NIC MAP.
The report also found continued momentum in active adult rental communities, where occupancy rose to 92.6% during the second quarter. Nearly 1,000 units were added during the first half of the year, bringing the tracked inventory to almost 130,000 units nationwide.
Source: GlobeSt/ALM