Senior Housing Occupancy Update

During the pandemic, senior housing (all forms) saw a drop, some precipitous like SNFs, in occupancy. As the pandemic has now waned, the recovery continues. This is good news for the sector, but occupancy is not the only factor impacting recovery.

According to the National Investment Center (NIC), occupancy in the sector varies between market locations. The economic and demographic strength of some regions are simply better than others. This has always been the case for senior housing. For example, according to NIC, at 84.1%, Sacramento IL occupancy saw the largest increase from the prior month, up 1.9pps but remained 6.6pps below March 2020 levels. Los Angeles IL occupancy had the largest decline and fell by 0.7pps in August 2023 to 85.5% and is now 8.6pps below pre-pandemic March 2020 levels.

Some takeaways via August data from NIC.

  • Majority IL projects have average occupancy at 85.8% with continued upticks through August. This is still however, 3.7% below March 2o20 levels.
  • For AL projects, occupancy ticked-up .03% since July to August’s level of 82.7, still 1.9% below March 2020 levels.
  • CCRC projects perform better overall in terms of occupancy vs. all other senior living projects.  CCRC IL was right at pre-pandemic occupancy at 90% while CCRC assisted living and memory care segments were at 86.9% and 86.4%, respectively.
  • In terms of inventory changes (units available for rent or use), CCRC IL and Memory Care experienced the most growth, 3.4% and 1.8% respectively.  SNF contracted, 1.9% for CCRC SNF units and 1% for non-CCRC projects.

  • Asking rent (monthly) was the highest for CCRCs compared to other project types. The highest asking annual rent growth for non-CCRCs was seen in the assisted living and memory care segments (5.9% to $6,006 and 5.9% to $7,671, respectively). Asking rent for CCRCs recorded the largest annual growth in assisted living and memory care (5.0% to $6,555 and 5.3% to $8,292, respectively).

While occupancy continues to recover, overall project performance remains fairly stagnant.  On a one-off basis in some markets, providers are looking at growth strategies again.  Most however, continue to struggle with staffing (not enough, all types), rising expenses due to persistent inflation, and high costs of capital with restricted capital access.  Providers with resources (cash and investments) tend to feel a bit differently about future growth options.  The most common growth strategies that I am seeing are,

  • Investments in home and community-based services, particularly home health and personal care.  This is definitely a defensive strategy for CCRCs that have residents with demands for in-home care.  The overall average age of residents tends to be higher in entry fee CCRCs and thus, the opportunity to meet their needs and add additional revenue sources makes home health and personal care, logical plays.
  • Investments in strategic partnerships with managed care organizations involved in I-SNP projects and other value-based programming.  ALs can do well here, some IL projects and of course, SNFs in value-based care partnerships.
  • Adding lifestyle elements that serve residents and the community such as health clubs, restaurants, medical clinics, alternative medicine programming (yoga, massage, acupressure/acupuncture).  

As I have written in similar posts on sector recovery, headwinds remain daunting.  Inflation has eased but rising energy prices suggest that a period of continued inflation relaxation is not yet in the future.  While the Fed (Federal Reserve) has likely paused rate increases for now, upward inflationary pressure caused by increasing energy and producer costs, may push the Fed to another late-year increase or early-2024 increase. 

If the U.S. economy drops into a recession, the outlook gets even murkier.  Labor opportunity may improve as layoffs in one industry sector could push labor into other sectors such as senior housing.  Unfortunately, a recession may drag occupancy gains in non-care segments, especially entry fee communities, where seniors choose to relocate.  An almost illiquid residential real estate market could become even more stagnant but with a recession, see a drop in housing values (values to date have remained high).  Time will tell. Choppy waters however, remain.


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