Despite new communities opening in steady numbers in the second quarter of 2021, average occupancies in large metro areas did not increase.
According to the latest figures from NIC MAP Vision, occupancy dropped to 78.7% during the second quarter of 2021. At 78.7%, occupancy in the first quarter of 2021 was unchanged from the first quarter of last year.
According to NIC Chief Economist Beth Mace, the occupancy report had nothing to do with demand, which was up “measurably” during the second quarter. The second quarter of 2015 saw an increase of 4,300 senior living units in the 31 primary markets tracked by NC MAP Vision, exceeding demand. Compared to the first quarter of 2021, the industry added about 5,100 units.
“That was a little surprising,” Mace told Senior Housing News. “Due to weaker start rates in the aftermath of the Pandemic, we had expected inventory growth to slow.”
Mace said many of the initiated projects before the pandemic accounted for much of the inventory growth.
In the coming years, the pace of new development and construction will slow, and if current trends hold, occupancy gains will return across the board as absorption rates increase.
NIC reported that it had seen the most positive lease sign-up rate since 2019 during 2Q21 – meaning the number of net lessees leased every quarter.
NIC MAP Vision tracks occupancy levels in 67 secondary markets besides primary markets, where occupancy rates were anemic. Operators in those markets saw their occupancy rates jump from 79.2% in the first quarter of this year to 80% in the second quarter.
Inventory growth accounted for the majority of the trend, as it did in the primary markets. While inventory growth was limited in secondary markets, demand substantially exceeded supply, unlike hot development markets like Houston or Atlanta.
Because primary markets experienced higher inventory growth, occupancy did not increase as much in primary markets.
With vaccination rates rising and Covid-19 cases plummeting, NIC sees growing optimism among senior living providers. The second quarter of 2021 saw an increase in occupancy for senior housing properties within NIC MAP primary markets, with 47% reporting an increase. Only 22.5% of Americans were ill during the peak of the pandemic.
As Mace put it, “We are cautiously optimistic. There are signs that things are beginning to turn around on the demand side of the formula.”
To grow your business in the senior industry, Create a free profile on Senior GuidePost. The Industry’s premium resource for Senior communities to find Qualified vendors serving the Senior Industry.