Senior Living Demand Surging, Setting New Record For Number Of Occupied Units

Senior living demand “surged” in the fourth quarter 2024, pushing the industry to a higher average occupancy rate and a new record number of occupied units.

Average occupancy rates in the 31 primary NIC primary markets rose to 87.2% in the fourth quarter of 2024, representing a gain of 0.7% from an average rate of 86.5% in the third quarter of the year, according to the latest occupancy report from the National Investment Center for Seniors Housing and Care (NIC). Occupancy in all of the primary markets registered higher than it did just before the Covid-19 pandemic in 2020.

Additionally, the total number of occupied senior living units reached a record high of 618,000 in the fourth quarter of 2024, an increase over the 611,000 occupied senior living units seen in the third quarter of last year.

A low number of newly constructed senior living communities and growing demand from the baby boomers led to the quarterly occupancy increase. There were fewer than 22,000 units under construction in the fourth quarter of 2024, representing the lowest level of new construction since the first quarter of 2014, according to NIC MAP Vision.

All told, there were 8,800 units of new inventory added across NIC’s 31 primary markets in 2024, which is only slightly more than the total number added in 2023.

If these trends hold, occupancy rates could exceed 90% by the end of 2026, an event that has only happened “a handful of times” since NIC MAP Vision began tracking senior living occupancy data data, according to NIC Senior Principal Caroline Clapp. She added that the senior living industry previously hit the 90% to 91% average occupancy range in the mid-2000s.

“We are still several percentage points away from the occupancy rate all-time highs,” Clapp said.

The report indicates the top three performing markets for occupancy remained steady with Boston, Baltimore and Tampa at 91%, 89.9% and 89.8% respectively. The lowest three were Atlanta, Houston and Las Vegas at 83.9%, 83.5% and 82.9% respectively.

Arick Morton, NIC MAP Vision CEO, said new construction deals are struggling to pencil in due to volatile capital costs and rising development costs.

“First and foremost, we need to see meaningful improvement in the access to capital for new construction before we will see the needle move on development activity, which is sorely needed to meet the growing demand,” Morton said in the release.

Annual rent growth in the fourth quarter of 2024 was 4.1%, a slight decrease over 3Q24’s average rent growth of 4.2%. Clapp said while the year-over-year asking rates are still above historical norms and hit peaks in 2023, there is an expected decline coming this year.

“Given the pattern across the past six quarters, it is likely that the magnitude of annual rent growth will continue to incrementally decline in the coming quarters,” Clapp said.

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