Elizabeth Leis Newman

About a year from now, the story coming out of the National Investment Center for the Seniors Housing & Care Industry conference will be around how operators are clutching their pearls about the decline in assisted living occupancy.

Or at least that’s my prediction based on the data coming out of the 2013 NIC conference, specifically related to construction coming online for assisted living.

While the annual NIC conference is known as a networking event and place where deals are made, one of the more underappreciated aspects of NIC is its robust data. It helps when those numbers are positive, which they have been if you are in the assisted or independent living sectors. Assisted living properties averaged 89.1% in occupancy rate in the third quarter of 2013, which is up 0.4 percentage points from the previous quarter, noted NIC managing director and director of research and analytics Chuck W. Harry Jr.

There also are regional high points. Baltimore and Portland, for example, are in the top five for assisted living and independent living occupancy. Sacramento is also “a market that is surging,” said NIC research analyst Chris McGraw. Occupancy there is up to 93.4% compared to 88% a year ago. Detroit has recovered from its lowest point, and Cincinnati has had “robust occupancy growth” at 91%.

And yet.

While assisted living is still quite strong and continuing care retirement communities are trending down, “most markets have [assisted living] under construction,” McGraw noted. For the third and fourth quarters of 2013, there are 1,400 units opening for assisted living. Next year, that number will jump to 2,000 units in the second and third quarters. As McGraw said, “There are clouds on the horizon,” when it comes to construction in assisted living.

Freestanding memory care also is on the rise for construction, and no one is going to laugh you out of the room if you question whether there is a high demand for both that and more assisted living facilities. It all depends, as NIC president Robert Kramer noted, whether there is a need in the area that is not being met.

Being a stronger operator — providing quality care and looking to partner with hospitals to prevent readmissions — is important. But it is just as important for developers to make sure the demand to build is real, and based on local market research. What matters are the numbers and knowledge of the area, rather than assumptions of what baby boomers will do over the next five years.

Elizabeth Newman is Senior Editor at McKnight’s. Follow her on Twitter @TigerELN.