Senior housing operators are likely foregoing rent hikes this year to maintain strong occupancy, according to the most recent Senior Housing Research report from Calabasas, Calif.-based Marcus & Millichap.
The report, which focuses on the first half of 2014, expects final calculations of occupancy at independent living senior communities to reach 91.5 percent by the end of 2014, an 80 basis point improvement. With a renewed strength in the housing market, seniors who were once trapped in mortgages are now able to sell their homes and become renters, as the average rent increased just 1.1 percent over the last year.
The report also credits cap rate compression in other sectors as the driver for interest in senior housing, primarily from nontraditional investors. Purchasing and operating and independent living facility will yield healthy returns, it notes. The confidence in the sector is evident: about 4,600 units were under construction during 2013, and investors increased their transaction velocity by more than 50 percent.
|Rank||Metro, State||Occupancy||Point Change|
|6||San Jose, CA||92.7%||-20|
|10||San Francisco, CA||91.8%||-130|
-Linsey Isaacs is an assistant editor with Multifamily Executive magazine. Follow her on twitter @LinseyI to continue this conversation.