market at least seems to have stabilized,
if job growth is stabilized to positive,
and if absorption seems to be ticking
up, then that suggests there may be
some pricing power.
Of course, most markets will show a
combination of these factors, and there
may be mixed signals. But at the very
least, using data to analyze trends can
point out red flags that need to be taken
into consideration—or give an indication
the time may be right to introduce a price
increase. ❏
Robert G. Kramer is president and
Michael A. Hargrave is vice president -
NIC MAP for the National Investment
Center for the Seniors Housing &
Care Industry (NIC). Reach them at
rkramer@nic.org or mhargrave@nic.
org. For more information about NIC
MAP, a NIC data and analysis service,
visit www.nicmap.org.
For the assisted living sector, we
know the near-term trends on the supply front. There are 2,300 units scheduled to be completed by the end of 2011.
That equates to about 1. 5 percent inventory growth on an annual basis. So if
the current absorption level persists—
and we look for it to remain at around
1. 5 percent annual growth—then occupancy should remain stable for assisted
living through the end of 2011.
And how about rent growth? If occupancy rates hold steady, will operators see pricing power in 2011 that will
enable them to raise rents? Once again,
that’s going to depend upon the dynamics of the local market. A number of key
factors will have to be considered: Is
the market still seeing housing pricing
loss? Is the job market flat or even losing jobs? Is a significant amount of new
construction coming online? If so, then
there may not be a great deal of pricing
power in that market.
On the other hand, if there’s no new
product coming online, if the housing
Go to ALFA Exchange ( community.ALFA.org)—
the only executive social networking community
in the senior living business—to share your
thoughts and exchange ideas.
Share, Search, Post, Tweet!
