Assisted living continues to boom in the seniors housing market, but caution is needed as more units are slated to open in mid-2014, said experts Thursday at the annual meeting of the National Investment Center for the Seniors Housing & Care Industry.
NIC MAP® results were released during a live session at the NIC annual convention in Chicago, which clocked in at a record 2,000 attendees.
“There is movement in the numbers in a positive direction,” said Chuck Harry, NIC’s managing director and director of research and analytics. “Occupancy is trending upward.”
The average occupancy rate for seniors housing properties in the third quarter of 2013 was 89.3%. Notable deals in the last quarter included a $400 million acquisition of 36 seniors housing properties by Formation Capital, and TPG Capital closing on an Assisted Living Concepts portfolio of 209 seniors housing units.
In the third quarter, a third of properties saw asking rents grow by 3% or more, Harry noted.
Freestanding memory care units are on the rise for construction, and assisted living has been in a mode of “build build build” said NIC research analyst Chris McGraw. Most markets have some assisted living facilities under construction: There are 1,400 units slated to come online in the both the third and fourth quarter of 2013, as well as in the first quarter of 2014. That’s expected to jump to 2,000 units each in the second quarter and third quarter of next year.
“There are clouds on the horizon” for assisted living, McGraw told McKnight’s.
Continuing Care Retirement Communities have not bounced back as quickly as other areas of seniors housing, McGraw noted. There was been little traction in reducing vacancies, and very few new CCRCs that are currently under construction.
“CCRCs kind of missed out on occupancy growth in the third quarter,” McGraw said. “There is much less movement when compared to other property types.”
That said, the CCRCs that opened before 2005 are doing “OK,” he said. CCRCs built after 2006 are having more struggles to achieve full occupancy as potential consumers continue to wait for the economy – and housing market – to rebound.
In skilled nursing, the occupancy rate was 87.6% in the third quarter of 2013, the same as the second quarter. The annual inventory growth for skilled nursing facilities was -.3%, which reflects slightly declining inventory growth.
NIC concludes Friday at the Sheraton Chicago Hotel and Towers.