Pandemic pain starts to wane for senior housing providers – Crain’s Cleveland Business

Occupancy has improved in Northeast Ohio independent and assisted-living properties, but the region remains among the softest in the nation.

According to a report from the National Investment Center (NIC) for Seniors Housing & Care, an Annapolis, Maryland, nonprofit that produces data for the sector, occupancy in the Cleveland Metropolitan Statistical Area reached 77% at the end of 2021, actually climbing above 75% at the end of 2020.

However, that pales compared to the sector’s pandemic comeback. NIC notes occupancy in the Cleveland MSA hit bottom at 74% in the first quarter of 2021.

Brian Spring, president of Danbury Senior Living, a North Canton-based provider with 20 properties in the region, said vaccinations for COVID-19 “played a big part” in setting the table for resurgent leasing in the third quarter and a busy year-end.

“We ended December with 85 move-ins in our portfolio for that month,” Spring said. “That’s incredible, because people generally are not keen on moving in during the holidays. We’re very pleased with that.”

Essentially, operators made up about half the ground they lost in terms of occupancy during the pandemic, but the impact was reduced by the completion of new properties in the region.

However, the region’s not as healthy as the industry is nationally. NIC reports national occupancy at the end of the year was 88%.

Cleveland’s 77% ranks among the bottom three of 31 large markets tracked by NIC, ahead of Houston, with 75% occupancy, and behind Atlanta, with 78% occupancy.

The other bottom dweller markets are areas with stronger economies and fewer barriers to entry, so they have a much larger pace of development.

“It’s not so great a situation,” Lana Peck, a NIC senior principal, said in a phone interview. “Cleveland had a lot of units, which take several years to plan and build, increase inventory just as COVID-19 hit.”

She said 967 units were added to the Cleveland market in 2020 and 159 were added in 2021.

In the Akron area, which NIC also tracks, occupancy improved to 76.3% at the end of 2021 from a low of 73% in the second quarter of the year. However, supply actually dropped by more than 200 units that were removed from operation through closings, such as at the Stow Glen Retirement Village in Stow.

Expectations are generally for the development of new units to slow as a result of the pandemic hiccup in occupancy. Nationally, just 35,000 units were under construction at the end of 2021, which NIC characterized as the weakest pace since 2015.

Spring said he believes the market may normalize from here because of slowing development, particularly since delivery of construction supplies has become so spotty it’s likely to slow down production of new developments.

“Cautiously optimistic is the term that comes to mind,” Spring said.

“It’s been two years and just when we thought we were out of the battle, something new would come up,” he added. “Last year at this time we were coming off a tough fourth quarter and in a very difficult first quarter. The vaccines have been a game changer, particularly for our residents. The question is where does the rest of COVID come out, and when will staffing shortages settle out. Those are the unknowns, but they are not quite as bad as the unknowns as we had before.”

Tough times typically cause real estate operations of every type to offer incentives to get customers in the door. According to the Northern Ohio Apartment Association, incentive packages of 5.7% were available in the Cleveland/Akron area late last year.

Moreover, with rising prices for multiple goods and increased wages, NIC surveys have shown many operators nationally are preparing to increase rates.

Although Danbury’s staffing challenges are not as tough as some of its competitors face, thanks to its 25-year history and culture, Spring worries that more operators in the region may close because they won’t have the staff for adequate operations. That may mean some more distress for the industry.