A strategic focus on marketing, pricing and outreach during the initial lease-up phase for senior living properties has the power to set the success for the industry moving forward, according to a new report from the National Investment Center for Seniors Housing & Care.
The second installment of the Senior Housing Analyst Review and OutlooK, or SHARK, report series reviews senior living lease-up trends over two key periods in the past decade — 2010-2015, a period of balanced growth, and 2014-2019, a period of supply expansion — and provides projections for the next three years. The report also examines how those trends can shape senior living lease-up strategies, highlighting the importance of the first year in “setting the trajectory for success.”
The post-recession recovery of 2010-2015 delivered what the industry describes as “balanced growth,” where demand outpaced supply. The market was recovering from the Great Recession, and a healthy balance existed between new developments and the absorption of those units, according to the report.
The second period, 2014-2019, saw notable growth in new supply, with supply outpacing demand. The imbalance highlighted the importance of closely monitoring supply and demand dynamics when considering market expansion, according to the report. With recent interest rate cuts by the Federal Reserve, along with the expectation of further reductions, NIC anticipates a resurgence in development activity by 2025.
NIC Senior Principal Omar Zahraoui wrote in a blog post on about the report that lease-up trends over the past decade consistently followed an S-shaped curve — occupancy started low, accelerated in the second year, and stabilized by the third and fourth years.
The first-year momentum for a senior living property made a “notable” difference and affected long-term stabilization outcomes and overall success, Zahraoui wrote. After the first year, all curves followed similar paths, with properties achieving stronger lease-up momentum in the first year being better-positioned to capitalize on accelerating demand in subsequent years.
The report found that properties that opened in 2022 and 2023 experienced a slower start due to some stabilized properties still recovering occupancy from the pandemic. But those properties also are projected to stabilize faster, with a steeper lease-up curve than in past cycles and new occupancy records. Half of senior living properties that opened in 2022 and 2023 are on track to exceed 97% occupancy by the fourth year, whereas 25% are expected to reach between 87% and 97% occupancy by the time.
For operators, Zahraouoi said, the first year isn’t just about filling units quickly, but establishing a trajectory that sets the stage for long-term success. The efforts put into the first year of a property have the potential to propel the industry forward, he said, allowing operators to reach more potential residents.
“These dynamics offer actionable insights for adapting our strategies, whether we’re opening in a balanced market, navigating a period of supply surge, or preparing for anticipated population growth for older adults, increased demand and moderate new supply,” he wrote, adding that operators are actively shaping the market dynamics. “By leveraging the first-year lease-up push, marketing and sales professionals have the power to change the dynamics of the future and redefine success for senior housing.”
The first report, launched in the spring, focused on demographic trends, construction activity, supply and demand, absorption-to-inventory growth velocity, occupied penetration rates and occupancy in the 99 primary and secondary markets followed by NIC MAP Vision.
