Senior Housing Occupancy Edged Up in Q1 Despite Rise in Omicron
However, more than six percentage points need to be recovered for seniors housing to fully rebound.
Senior housing occupancy ticked up modestly in the first quarter, rising 0.2 percentage point from fourth quarter numbers across 31 primary markets tracked by NIC MAP.
The increase marks the third consecutive quarterly increase in occupancy, and the Q1 level is 2.5 percentage points above the pandemic low of 78% recorded in Q2 2021. It is, however, 6.7 percentage points below pre-pandemic levels in the first quarter of 2020.
The data, reported by NIC Analytics researchers in a recent webinar, is “encouraging” in light of COVID, experts said. But they also underscored that more than six percentage points need to be recovered for seniors housing to fully rebound. Nursing home occupancy is the furthest behind pre-pandemic levels of all sectors within the asset class.
Construction remains muted in most markets, with the exception of cities like Miami, where construction as a share of inventory hit 10.7% in the first quarter, and Portland, where construction was at an all-time high at 1,813 units in 12 properties. And on the investment side, private buyers dominated transaction activity in the quarter.
“Private capital has been a steady source of capital for many years, especially the private partnerships and family regional owner/operators have been a steady source of liquidity,” a report detailing the NIC MAP data notes. “Private buyers have represented 35% or more of buyer activity in seniors housing and care every year since 2016.”
And of the $1.2 billion of deals closed in Q1, private buyers accounted for $877 million, or 76% of the closed volume. In contrast, they represented just 43% of closed volume in 2021 as a whole. Buyers are increasingly seeing upside prospects in regions like the Sun Belt, while others are converting distressed assets into mental and behavioral health centers.
The sector as a whole saw 3.1% rent growth last year, an increase that was largely offset by inflation and operating cost and wage increases. The American Health Care Association/ National Center for Assisted Living noted that staff shortages plagued more than 95% of nursing homes and assisted living communities last year.