The economy is in recovery, according to some, and along with improved economic conditions, senior housing occupancy rates have leveled off. Currently, the average is 87.7 percent among the top 31 top market areas in the U.S., according to the National Investment Center for the Seniors Housing & Care Industry (as cited in an article by National Real Estate Investor). Steady occupancy rates mean property managers and landlords gain confidence in raising rents, or at least eliminating concessions offered during the recession.
The National Investment Center for the Seniors Housing & Care Industry (NIC) also notes that fewer new senior housing properties are being constructed, estimating new construction at only about 2 percent of the current inventory.
Seattle-based Emeritus Corp., one of the largest assisted living providers in the U.S., has indicated a rent hike is definitely in the future. Granger Cobb, President and co-CEO of Emeritus, tells National Real Estate Investor, “Pricing will move up with occupancies. It’s a matter of when, not if.”
Michael Hargrave, vice president at NIC, says, “Rental rates are going up, but at a very slow pace.” The NIC’s data shows that rents rose only 0.7 percent from 2009 to 2010. The NIC also says that net operating income at most senior living companies have stagnated or even dropped slightly, so a raise in rents, as much as it may be troublesome for consumers, may be necessary for maintaining the level of service seniors and their families have come to expect.
That said, concessions to boost occupancy rates are still widespread in the senior housing industry. Companies are offering to waive move-in fees, funding moving costs, or even a free month’s rent in order to entice seniors to make a move. In addition, many seniors who put off a move to a senior living home during the recession are now moving out of necessity — whether health or financial.
Other companies already have rent hikes on the horizon. Silverado Senior Living, which operates 20 memory care facilities, has a planned rent increase scheduled to take effect on January 1st. The increase will range from 3 to 5 percent. Chicago-based Senior Lifestyle Corp., which operates 70 buildings in 15 states, on the other hand, has only selective increases planned. Rent increases will depend largely on the region in which each building is operated, with an average increase of about 4 percent. Residents’ individual circumstances will also play a role, according to RonnDa Peters, director of community outreach at Senior Lifestyle, who says individuals who cannot afford an increase most likely won’t be subject to one.
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