Volatile capital market challenges aside, senior living communities have a “golden opportunity” to increase occupancy and drive operational growth in 2024 thanks to favorable supply demand market dynamics.
That’s according to a National Investment Center for Seniors Housing & Care blog posted Thursday by Principal Omar Zahraoui. He discussed NIC Analytics’ first occupancy stratification report, which focuses on stabilized occupancy distribution within senior living in 2023.
A “remarkable resurgence” in demand for senior housing has occurred over the past three years, but Zahraoui noted that occupancy recovery varies across communities and markets.
Before the pandemic started, 17% of senior living communities in NIC MAP’s 99 primary and secondary markets had stabilized occupancy below 80%. The sector has made “notable strides” in occupancy recovery and is on pace to return to or surpass pre-COVID 2019 occupancy levels by the end of the year. But 23% of senior living communities — or approximately one in four — still were reporting occupancy rates below 80% in the fourth quarter of 2023, Zahraoui said.
Continuing care retirement / life plan communities reported the smallest share (16%) of communities with occupancy below 80%, followed by independent living (22%) and assisted living and memory care (both 25%).
The NIC Analytics outlook for 2024 hints at “notable improvement” in stabilized occupancy distribution by the end of the year. Specifically, the report reveals an expectation that 85% of senior living communities will achieve occupancy levels of 80% or higher, slightly exceeding 2019 figures. But 13% of communities are expected to remain in the 60%-to-80% occupancy range, and another 2% are anticipated to have occupancy below 60%.
In NIC MAP’s primary and secondary markets, the stabilized occupancy rate for senior living communities is expected to reach an average of 90% by the end of the year.
“While each of these communities faces its unique set of challenges contributing to a slow recovery process, overarching challenges and opportunities emerge at the market level,” Zahraoui wrote.
Construction starts are low, and inventory growth remains moderate, but both are expected to regain pace by the end of the year, bringing competition from an increase in newly opened communities, he said.
“2024 presents a golden opportunity to increase occupancy amid favorable market dynamics,” Zahraoui concluded.
