Senior living occupancy rates have witnessed significant growth for eight consecutive quarters as of the second quarter of 2023. However, the industry is still grappling to reach the occupancy levels seen before the pandemic.
The senior living occupancy rate, encompassing both independent and assisted living, rose to 83.7% in the second quarter, marking a 0.6 percentage point increase from the first quarter and a significant 5.9 percentage point jump from the pandemic’s nadir of 77.8% in Q2 2021. Despite these gains, the rate remains 3.4 percentage points shy of the pre-pandemic level of 87.1% from Q1 2020.
According to the National Investment Center for Seniors Housing & Care (NIC), this current stretch is the longest such period of occupancy rate gains. Yet, it’s essential to note that overall rates still lag behind those from the pandemic’s onset. The number of occupied units saw a 0.9% uptick in the second quarter. But the total units only grew by 0.2%. And inventory has increased by 1.3% year-over-year, marking the smallest rise since 2012.
The Remote Work Ripple Effect
The surge in remote work has undeniably shaken the office market, with analysts now pondering its potential impact on senior housing. Furthermore, with remote work offering increased flexibility, many are opting to care for their elderly parents for extended periods, leading to a delay in transitioning to senior housing; markets with a prevalence of remote work correlate with lower senior housing occupancy rates.
Life Plan Communities Lead the Way
In 2023, life plan communities consistently outperformed the broader senior living industry in terms of occupancy. Independent living units in these communities reported a 90% occupancy rate in Q2 2023, while assisted living and memory care units followed closely with 86.9% and 86.4%, respectively. In comparison, non-life-plan communities lagged behind with lower average occupancy rates.
On the other hand, a survey by NIC garnered responses from owners and executives of 39 senior housing and care companies, and it revealed that staffing shortages remain a significant concern. But while 82% of respondents are grappling with this issue, it is a lower percentage than the staggering 90-99% rates seen over the previous 18 months.
With limited new inventory expected in the coming years due to the slowdown in construction, the industry is optimistic about further improvements in occupancy rates. So while challenges remain, the senior living industry is showing signs of recovery. The interplay of remote work, geographical differences, and construction trends will be crucial determinants in shaping the industry’s future trajectory.
Experience Care will continue to keep you informed on the latest updates on occupancy rates.
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