In the elderly care sector, a critical metric for stakeholders is the time required for a care home to move through its build-up (or lease-up) phase and reach mature occupancy. Investors and operators alike are looking for the unicorn opportunities that offer a combination of rapid occupancy growth and high fee potential to minimize the period during which an asset operates at a loss. Beyond the idealism, for the majority, it is about opportunities in the Goldilocks Zone with sufficient occupancy growth and suitable quality AWF profile to drive the commercial returns developments demand.
Previous analyses have shown that care homes across the UK fill at an average rate of 3.0% of capacity. In this report, we delve deeper into how fill rates have evolved over time, comparing trends from the pre- and post-COVID eras. This comparison aims to determine whether newly opened care homes remain quality investment opportunities in today’s market.
To conduct the analysis, we utilized the C&W Elderly Care Home Trading Database, compiling a dataset of care homes opened between 2016 and 2024. This dataset includes homes in the early to mid-stages of the build-up phase (occupancy rate below 30%) and those with at least six months of continuous occupancy data.
General Elderly Home Fill Rates
The analysis of general fill rates provides insight into the speed at which care homes transition from their initial build-up phase to mature occupancy.
- Fill rate: Care homes opened between 2016 and 2024 in the early to mid-build-up phase filled at an average rate of 2.33 beds per month, or 3.22% of capacity per month.
- Time to reach maturity: For an average care home with 70 beds, and assuming mature occupancy at 90%, it would take approximately 27 months to reach this level from the time of opening.
In our previous works, we explored the key factors that influence the speed at which care homes achieve mature occupancy. These factors include location, not just in terms of geography but also the underlying demographic profile and supply-demand dynamics in the area, the strength of the operator’s brand, the quality and specification of the home relative to local competition, and the success of pre-opening sales and marketing campaigns. As would be expected, homes that are well-positioned within their local market and well managed through their infancy, tend to progress through the build-up phase most efficiently.
While these factors remain foundational, the COVID pandemic created a major disruption to fill rates. The data shows a significant decline during 2020 and 2021, when lockdowns and operational restrictions slowed the intake of new residents. To better understand these shifts, we segmented the dataset into two timeframes: homes opened in or before 2021 (recent pre-pandemic and pandemic) and those opened in 2022 or later (post-pandemic, after the UK’s full reopening).
Pre-Pandemic Fill Rates
Examining the fill rates of care homes opened before and during the pandemic reveals the challenges operators faced during this time:
- Fill rate averages: Homes opened pre- or mid-pandemic achieved an average fill rate of 2.09 beds per month, or 2.83% of capacity per month.
- Time to maturity: For a 70-bed care home, this translates to an average of 30 months to reach 90% occupancy—three months longer than the dataset’s overall average.
The effects of the pandemic cannot be overstated. Lockdowns and restrictions significantly reduced the ability of homes to take on new residents, often limiting intake to exceptional cases. The pre- and mid-pandemic data has an obvious downward pull on the data narrative and hence the need for our post pandemic extrapolation below.
Post Pandemic Fill Rates
In contrast to pre-pandemic performance, care homes built after 2021 show encouraging improvements in fill rates:
- Fill rate averages: post-COVID homes filled at an average rate of 2.53 beds per month, or 3.56% of capacity per month.
- Time to maturity: For a 70-bed care home, this represents a build-up phase of approximately 24 months, six months faster than the pre-COVID average.
The pandemic had an impact on the ability of the sector to deliver new care homes and as such the dataset for 2022 new openings is less fulsome than subsequent periods. As new homes continue to be delivered through ongoing development programs across the sector, the availability of key evidence will expand, allowing our analysis to deepen.
But at this stage, the key conclusion is that in a post pandemic world, the ability for new care homes to fill at a greater rate than previously is evident. The shift is not epoch making, more a movement of a few percentage points, but nonetheless underpins a growth mentality.
A healthier growth environment
The data indicates that the care home build-up profile has improved in the post-COVID market. We have resisted comparing to more historic pre-pandemic times as the nature of Grade A homes and the market within which they sit is simply not the same now as it was a decade or so ago. The way in which new homes are being developed, the service offering, the parties undertaking such projects and the nature of the client base have all subtlety shifted.
The key point from our research is that the shorter timeframes required to reach mature occupancy suggest that the profit bridge — defined as the period of financial loss during the build-up phase —has been reduced, with an obvious benefit to the success of any project.
None would claim the driver of success to simply be inherent to the market and our observed improvement in lease-up rate should not overshadow the critical role played by operators, developers and stakeholders in adapting to market conditions. The maturation of what Grade A care homes are in the market and the ability of stakeholder to drive enhancements in brand strength, marketing strategies, and pre-opening sales programs have been pivotal in driving this progress.
For investors, this healthier environment supports care home development and delivery as an attractive opportunity, even in the face of historically higher project costs that seek to test the development algebra. Reduced cash flow deficits during the build-up phase are an obvious positive, while the sector’s long-term growth drivers, such as an aging population and rising demand for care services, remain firmly in place. Importantly, the ability of operators to innovate and align with market needs ensures that well-positioned assets are likely to deliver both stability and sustainable growth in the years ahead.
