NIC Notes

Insights in Seniors Housing & Care

Article

By: Beth Mace  |  November 05, 2019

More Key Takeaways from NIC’s Third Quarter 2019 Seniors Housing Data Release

Market Trends  |  Seniors Housing

In last week's NIC Notes, we shared three highlights from the October NIC MAP® Data Service webinar on key seniors housing data trends during the third quarter of 2019. Two additional key takeaways are detailed below.

Takeaway #1:  Increase in seniors housing occupancy from an 8-year low.
Takeaway #2:  Slight increase in assisted living occupancy.
Takeaway #3:  Slowing of assisted living units under construction.

Takeaway #4Wage growth continued to exceed rent growth.

  • Since 2017, same-store asking rent growth for assisted living has been decelerating and this pattern continued in the third quarter when annual rent growth slipped back to 2.3% from 3.8% in late 2016, and from 2.8% one year ago. This can be seen on the orange line below.
  • For independent living, the pattern is not as consistent and, in the third quarter, annual asking rent growth was 3.0%.
  • Compared with the growth of average hourly earnings for assisted living in the second quarter, which increased by a very strong 5.9% from year-earlier levels, asking rent growth has been lagging. Based on anecdotal comments from operators, the BLS estimate of 5.9% seems to be more accurate than past readings of the upward pressure they have been experiencing for wage growth.
  • For many operators, labor expenses amount to 60% of their expenses so this is taking a toll on their ability to maintain and grow NOI.
    Q3 Slide 13v3

Key Takeaway #5:  Wide distribution in price per unit (PPU).

  • The chart below represents a snapshot of the pricing distribution of seniors housing and skilled nursing properties as of the third quarter of 2019.
  • For perspective, the average price per unit for seniors housing was $184,000, which represents an increase of 9.2% from the second quarter when it came in at $168,500. Compared to a year ago, the price per unit increased 17%.
  • There is a wide range of pricing, however, as this chart shows, with the upper decile at $324,000.
  • For skilled nursing the upper decile is $200,000 lower at $134,000. 

Q3 Slide 19v4-1

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About Beth Mace

Beth Burnham Mace is the Chief Economist and Director of Capital Markets Research at the National Investment Center for the Seniors Housing & Care Industry (NIC). Prior to joining the staff at NIC, she served as a member of the NIC Board of Directors for 7 years and chaired NIC’s Research Committee. Ms. Mace was also a Director at AEW Capital Management and worked in the AEW Research Group for 17 years. While at AEW, Ms. Mace provided primary research support to the organization’s core and value-added investment strategies and provided research-related underwriting in acquisition activity and asset and portfolio management decisions. Prior to joining AEW in 1997, Ms. Mace spent ten years at Standard & Poor’s DRI/McGraw-Hill as the Director of the Regional Information Service with responsibility for developing forecasts of economic, demographic, and industry indicators for 314 major metropolitan areas in the U.S. Prior to working at DRI, she spent three years as a Regional Economist at the Crocker Bank in San Francisco. Ms. Mace has also worked at the National Commission on Air Quality, the Brookings Institution and Boston Edison. Ms. Mace is a member of the National Association of Business Economists (NABE), ULI’s Senior Housing Council, the Urban Land Institute and New England Women in Real Estate (NEWIRE/CREW). In 2014, she was appointed a fellow at the Homer Hoyt Institute and was awarded the title of a “Woman of Influence” in commercial real estate by Real Estate Forum Magazine and Globe Street. Ms. Mace is a graduate of Mount Holyoke College (B.A.) and the University of California (M.S.). She has also earned The Certified Business Economist™ (CBE), which is the certification in business economics and data analytics developed by NABE. The CBE documents a professional’s accomplishment, experience, abilities, and demonstrates mastery of the body of knowledge critical in the field of economics and data analytics.

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