Recovery in senior housing continues in Q2

senior housing

An NIC Map Vision brief on the state of the senior housing industry reports that its fundamentals are slowly improving after the loss in occupancy the industry experienced during the pandemic.

Market or markets?

The senior housing market is highly fragmented, with NIC Map Vision dividing properties into market segments by the type of units comprising the majority of those on the property. Unit types they consider are: independent living (IL), assisted living (AL) and nursing care (NC) units.

Q2 overview

The NIC Map Vision brief gives a quarterly snapshot of the current state of the market for senior housing by reporting on data collected from the top 31 metro markets. The brief discussed here is a freely distributed extract from a more detailed report that is available to their paying clients.

The brief notes that occupancy plunged after the pandemic arrived in early 2020. It fell by 10 or more percentage points for all property types over the first year of the pandemic, with higher losses being seen in properties that cater to more frail occupants.

NIC Map Vision reported occupancy in Q2 2022 was 83.9 percent for IL properties, 78.8 percent for AL properties and 78.5 percent for NC properties. These are all up from their levels in Q1, with increases of 70 basis points (BP) for IL properties, 110 BP for AL properties and 90 BP for NC properties.

NIC Map Vision reported positive annual rent growth for the three senior housing market segments, with rents rising 3.0 percent for IL properties, 4.6 percent for AL properties and 2.6 percent for NC properties. While these increases are well below the rates of rent growth being seen for market-rate multifamily properties, they are up from the rates NIC Map Vision reported for Q1.

Cap rates were reported to be 5.8 percent for IL and AL properties, up 40 BP from last quarter. However, the cap rate for AL properties was not available in this report. Transaction volume was a little over $1 billion, about half the level in Q1.

The NIC Map Vision report is available here.