CCRC Performance 2Q 2023

The following analysis examines occupancy and year-over-year changes in inventory, and same-store asking rent growth—by care segment—within CCRCs and non-CCRCs in the 99 combined NIC MAP Primary and Secondary Markets. The analysis also explores the distribution of occupancy rates by payment type across all care segments during the second quarter of 2023.

NIC MAP^®, powered by NIC MAP Vision, collects primary data on occupancy, asking rents, demand, inventory, and construction for about 16,200 independent living, assisted living, memory care, skilled nursing, and continuing care retirement communities (CCRCs—also referred to as life plan communities) across 140 U.S. metropolitan markets. The dataset includes more than 1,165 not-for-profit and for-profit entrance fee and rental CCRCs in these 140 combined markets, including 1,087 in the 99 combined Primary and Secondary Markets.

2Q 2023 Market Fundamentals by Care Segment - CCRCs vs. non-CCRCs

The exhibit below illustrates the relative market performance of CCRCs vs. non-CCRCs by care segment in the second quarter of 2023 and includes year-over-year changes in occupancy, inventory, and asking rent growth.

Occupancy. Overall, the occupancy rate for CCRCs continued to outpace that of non-CCRCs across all care segments. The difference in the second quarter 2023 occupancy rates between CCRCs and non-CCRCs was largest for the independent living segment (6.5pps) and the assisted living segment (4.4pps), and smallest for the nursing care segment (1.4pps).

The CCRC independent living segment had the highest occupancy (90.0%) in the second quarter of 2023, followed by CCRC assisted living and memory care segments (86.9% and 86.4%, respectively).

In terms of occupancy improvements from one year ago, the largest occupancy gains for both CCRCs and non-CCRCs were seen across assisted living and memory care segments, while the smallest gains were seen across independent living segments.

Asking Rent. The monthly average asking rent for CCRCs remained higher across all segments. However, non-CCRCs had relatively larger rate increases from year-earlier levels across all segments except nursing care. The highest year-over-year asking rent growth for non-CCRCs was seen in the assisted living and memory care segments (5.9% to $6,006 and 5.9% to $7,671, respectively). Similarly, asking rent for CCRCs recorded the largest annual growth in the assisted living and memory care segments (5.0% to $6,555 and 5.3% to $8,292, respectively).

Note, these figures are for asking rates and do not consider any discounting that may be occurring.

Inventory. From year-earlier levels, nursing care inventory for both CCRCs and non-CCRCs experienced the largest declines (negative 1.9% and 0.9%, respectively). The highest year-over-year inventory growth was reported for the non-CCRC independent living segments (3.4%) and memory care segments (1.8%).

Negative inventory growth can occur when units/beds are temporarily or permanently taken offline or converted to another care segment, outweighing added inventory.

2Q 2023 Occupancy Distribution by Care Segment - Entrance Fee CCRCs vs. Rental CCRCs

The exhibit below explores the distribution of occupancy rates across entrance fee and rental CCRC care segments and shows a greater prevalence of entrance fee and rental CCRC care segments within the higher occupancy rate ranges.

Entrance Fee CCRCs. The combination of the 80-90% occupancy range and >90% occupancy range shows that 89% of entrance fee independent living segments reported an occupancy rate above 80% in the second quarter of 2023. This represents the largest share across all care segments and payment types. Assisted living follows closely at 82%, while memory care stands at 78%, and nursing care stands at 68%.

Rental CCRCs. Approximately 74% of independent living segments reported an occupancy rate above 80%, followed by assisted living and memory care segments both at 75%, and nursing care segments at 66%.

In conclusion, as the senior housing occupancy recovery continues and shows encouraging trends, it’s important to recognize that even high-end properties, with their premium amenities and enhanced living standards, are not immune to the sensitivities of their residents regarding rate increases. Even residents who can theoretically afford these rate hikes may become resistant after a certain limit. It is also important to understand what both current and prospective senior housing residents are prepared to pay and the potential impacts of rate increases on the pace of move-ins and move-outs.

Look for future blog posts from NIC to delve deep into the performance of CCRCs.  
Are you interested in learning more?  To learn more about NIC MAP Vision data, and about accessing the data featured in this article, schedule a meeting with a product expert today.

This article originally appeared in Ziegler's Senior Living Finance Z-News.