Senior Housing Improves Again Amid Supply Crunch
Occupancy and other metrics are looking up, according to fresh NIC data.
Rising senior housing demand continues to push the occupancy rate higher, carrying on a trend that started with the postpandemic recovery and is reflecting broader senior housing trends.
Overall, occupancy in the sector was up a healthy 70 basis points from the second to the third quarter, reaching 88.7 percent, according to a recent senior housing report from the National Investment Center for Seniors Housing & Care.
This marked the 17th consecutive quarterly increase, and the organization expects occupancy to surpass 90 percent by the end of 2026.
“Until we start to see development tick up in a meaningful way, we feel that we are going to continue to see the upward march of occupancy levels,” Lisa McCracken, head of research & analytics at NIC, told Multi-Housing News.
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“We not only have muted inventory growth, which helps boost occupancy, but we have a rapidly aging population. The convergence of these two key elements will continue to bolster new records of occupied senior housing units,” she continued.
At the end of September, the occupied senior housing unit count clocked in at 630,000, up from 623,500 in June. What’s more, during those three months, just 1,400 units came online.
Some of the hurdles senior housing developers face include “labor challenges, lengthening construction timelines and land acquisition costs,” McCracken added.
“We need to think about how we can bring forth projects in a more efficient way; otherwise, we are going to be in this persistent cycle of escalating costs to bring forth any new project. Ultimately, those costs will need to be passed along to the customer and you can only push rates so far,” she reasoned.
Annual rent growth stood at 4.3 percent as of September, NIC MAP shows. The senior housing sector’s solid fundamentals are attracting investors as well, with assets changing hands at a rolling four-quarter price per unit of $154,237 in June. This is also in line with alternatives continuing to gain ground in allocations in the CRE space.
“We are clearly seeing increases in the average price per unit. That has been up since early 2024. We are hearing of more competition for deals and we know that people want to invest and put their money to work in the sector. We expect that we will see healthy four-quarter rolling averages in the coming months,” McCracken said.
Senior housing occupancy remains stable across the map
NIC MAP tracks occupancy across 31 primary U.S. markets, all of which had rates above 85.0 percent as of September. Boston led the way at 92.6 percent, followed by San Francisco (90.9 percent) and Baltimore (90.6 percent). At the opposite end stood Miami (85.3 percent), Atlanta and Las Vegas (85.9 percent each).
What’s more, around a quarter of NIC MAP’s primary markets saw negative inventory movement across the past three years, McCracken told MHN. That was the result of sluggish stock growth combined with properties going offline.
“The average age of a senior housing property is 24 years. If there is no meaningful reinvestment over the years, it becomes difficult to be competitive. Until we start to see notable inventory growth, we suspect that select markets will be in this flat to negative inventory growth state,” she concluded.
