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Senior living operators have the wind at their back with regard to demand. Their communities might be closer to full than they think, limiting their ability to grow in the future.
The issue is occupancy, or rather, which occupancy metric operators track. Many senior living operators look at average occupancy in a market to gauge how much more upside, and therefore margin potential, they have ahead.
A new NIC MAP report last month indicated that looking at median occupancy along with average stabilized occupancy tells a better story of a market and its current conditions with regard to demand than average occupancy alone. The issue is that average occupancy includes outliers on the low end of the range that could skew an average toward a lower occupancy rate overall.
Senior living operators base their growth plans on occupancy rates for the simple fact that every percentage point they can add to their census adds to their margins. Therefore, if average occupancy differs from reality by even only a few hundred basis points, I think operators risk making growth missteps.
The growth opportunity ahead of the senior living industry is large, but operators and their partners can only expand in so many places at one time. Knowing the difference between average occupancy and median occupancy could make operators even more effective in market selection, and not knowing it can put them at risk of growing in the wrong places at the wrong time.
Given what I have heard from some senior living operators about growth and occupancy, I don’t believe they are all making hasty decisions about where to plant their flag next. If anything, development woes are holding them back from growing at a much faster rate right now, forcing a more cautious attitude. And I think that demand for senior living is so high that operators will notch occupancy gains at substantially all of their well-functioning communities.
Still, I don’t hear leaders talk of median occupancy nearly as much as average occupancy with regard to demand they see ahead. I think more should take the metric into account as they seek to welcome as many residents into their communities in the years ahead.
In this week’s SHN+ Update, I analyze recent data and conversations surrounding median occupancy rates and offer the following takeaways:
- Why average occupancy can overcount demand upside
- Operator thoughts on tracking conditions in growth markets
Median occupancy an important part of the story
In the second quarter of 2026, NIC MAP data showed average senior living industry occupancy registered at 89.5%, suggesting high demand but room to grow. But the senior living industry’s median occupancy rate of 92% indicates there is potentially less upside to realize.
The gap between average and median occupancy “suggests that many communities and markets are performing better than the average would indicate, while a smaller group of properties continues to pull down overall results,” the report’s author, NIC MAP Senior Housing Market Specialist Dustin Shandri, told me.
Instead of looking at a market’s average occupancy alone, companies also should examine median occupancy to gauge its full potential, he told me. More than four-fifths (84%) of NIC MAP primary and secondary markets currently carry median occupancy of 90% or greater.
“Together, the two measures provide a more complete picture of market performance by showing both overall results and the experience of the typical community,” Shandri said. “As occupancy continues its trend towards industry highs, that broader perspective can help stakeholders better understand the health of the sector and the urgent need for new inventory in many markets.”
The implication for senior living operators is that opportunities on paper may not materialize in reality. Operators looking only at average stabilized occupancy might struggle to add census more than they would have otherwise expected, Shandri wrote.
Investors can study median occupancy to frame opportunities in certain markets. High occupancy typically signals strong demand fundamentals, while low occupancy “requires a closer look at the asset itself,” he added. Similarly, developers can better determine whether a market is suffering from a lack of demand or a mismatched product that isn’t meeting it.
Scott Eckstein, managing director of Active Living International and chief strategy officer at Ciminocare, pointed out on LinkedIn last week that roughly two-in-five senior living primary and secondary markets reported median occupancy above 93%.
“That’s not a recovering market. That’s a market approaching operational capacity,” Eckstein wrote.
I spoke with Eckstein, who told me that senior living stakeholders should consider median occupancy when determining where and what kind of projects are being developed, as well as setting it as a goal to aim for in order to remove outliers from the equation.
“We have to take into consideration that the market is changing,” he said.
Senior living operators are using a variety of metrics to inform their growth plans, not just occupancy. Workforce, migration data, average economic profiles of prospective residents, local wages and other data are also important to study. The bottom line is that operators, investors and developers cannot just study vacancy to determine the ultimate opportunity in a market. As more senior living companies gear up for growth, it’s a lesson I think they should keep close in mind.
Looking at the trendlines
When it comes to occupancy, a rate is just a snapshot in time. The really valuable information lies in the trendlines.
Ben Burke, who launched Headwaters Group in 2022 after leading Anthology Senior Living, qualifies markets for growth not only based on their current occupancy rates, but how those rates have changed over time. On paper, a high occupancy rate might suggest a market is doing great.
“But how long did it take for that property to get to that occupancy? Did it get to that occupancy in a year, or to get to that occupancy in eight years? Did it get to 95% and then go down, and then go back up?” he said. “I think that story is more important than the snapshot in time.”
Brookdale Senior Living (NYSE: BKD) also studies more than occupancy snapshots when looking at a potential market in which to grow. The company has in 2026 pivoted from shrinking to potentially growing in a small number of markets where it already has communities.
“Instead of looking at an average of individual communities, we just take a look at the total number of units in a market as the denominator that is available over the total number of units that are occupied in that same market,” CEO Nick Stengle said during an SHN+ TALKS appearance last week. “It’s the inverse that’s more interesting. How many are unoccupied? And that’s where the real value is.”
Brookdale has a real interest in correctly judging the upside of its markets. The company has spent years unwinding leases to get to the 517 communities in its portfolio with the most promise. Now, its leaders have bet its future on their ability to raise occupancy rates in dozens of communities across the U.S. But that plan hinges on understanding which markets can support a few percentage points more of occupancy growth, and which can’t.
I think there are many operators going through that same process now as they take on turnaround opportunities with partners. At the end of the day, there is still a lot of upside to realize, and median occupancy is another tool with which operators can better call their shots.