While all senior housing properties experienced an increase in vacancy rates across the country, skilled nursing facilities saw higher levels than other sectors in the first quarter of the year, according to a report released by Moody’s Analytics REIS.
That was despite the introduction of Covid-19 vaccines — the trend means that questions still exist about how much the pandemic might have suppressed consumer demand for skilled nursing and other types of senior housing and care.
“Although virus cases have been declining over the past quarter with a larger percentage of the population undergoing vaccination, vacancy increases in the first quarter of 2021 indicate that demand for senior housing continues to erode,” said Benjamin Bloch, research associate at Moody’s.
SNF vacancy increased 140 basis points to sit at 16.5% during the first financial quarter this year, the quarterly report said. Across all senior housing sectors, vacancy increased on average 100 basis points to 17%.
The first quarter of 2021 marks four straight quarters of vacancy increases across the industry.
Skilled nursing had the highest negative net absorption too, with minus-8,400 units. This metric measures the amount of commercial space vacated and placed on the market against space leased.
Other sectors in the report — independent living, assisted living and memory care facilities — had negative net absorption of minus 1,500, minus 1,800 and minus 800 units, respectively.
Skilled nursing centers, along with independent living and memory care, saw a decrease in rental rate growth year-over-year too, reflecting vacancy drops in the first quarter. SNF growth rates were reportedly 0.8% compared to 1.0% in the same quarter last year.
Assisted living was the exception, Moody’s said, with the growth rate remaining the same during this time frame.
“The rest of 2021 will be pivotal for the sector – will consumer confidence in this care type return if they can continue to show that an increased priority on medical safety and well-being at their locations has been able to provide a safe and healthy environment for seniors? Or will there be a more long-lasting shift in the sector demand dynamic, causing properties who lag the field in implementing modernized living environments to continue to experience high vacancy levels?” posited Bloch.
The Moody’s researcher added that a “significant amount of time” will pass before vacancy levels are back to where they were pre-pandemic.
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