Survey shows home prices stable in B.R.

A report prepared by a local Realtor shows that new home prices continue to rise in East Baton Rouge Parish, while staying relatively stable in Ascension and Livingston parishes, despite a slowdown in sales. Don Stern, a senior real estate consultant with Coldwell Banker Mackey Co., says that average price of a new home increased by nearly 11% in East Baton Rouge during April. The average price went from $273,767 to $303,285. In Livingston Parish, the average price for a new home increased by 2.2%, from $188,125 in April 2007 to $192,278.

Ascension posted a slight drop, from $258,827 in 2007 to $254,767 last month. At the same time, the average cost of a resale home increased by 1.4%, to $210,292. The average cost of a resale home in East Baton Rouge and Livingston was virtually unchanged from the year earlier. Stern says a shortage of affordable new houses in Ascension is driving buyers into the resale market. "If you look in the lower price ranges, new construction is still continuing to move. It’s the expensive stuff that’s sitting there," Stern says. -- Timothy Boone

Union National Life Insurance building back on the market

The old Union National Life Insurance building on Goodwood Boulevard is back on the market, with an asking price of $6 million. The 78,000-square-foot building was purchased in August 2006 for $4 million and has been occupied by the Shaw Group and ICF for the Road Home program. Chad Ortte, an agent with Donnie Jarreau Companies who has the listing, says the lease on the building expires in June 2009 and will not be renewed.

Poll: Most see need for more downtown office space

Real Estate Weekly readers say out of five business areas, downtown is the place that needs office space the most. Thirty-one percent of the people who responded to an online survey selected downtown, while 22% say Florida Boulevard/Airline Highway needs more offices. Twenty percent say Corporate Boulevard/College Drive has a need for more office space, while 18% of respondents selected Essen Lane/Bluebonnet Boulevard and 9% picked South Sherwood Forest Boulevard. Nearly 150 people participated in the survey.

This week's question: Do you think high gas prices are having an effect on the local housing market?

Tom Cook: Pelican State Credit Union buys O'Neal Lane site

The Pelican State Credit Union bought a 6.83 acre tract on O'Neal Lane for a new corporate offices/branch site. The property was purchased for a total price of $2.1 million, which comes to a little over $7 per square foot. The property was brokered by Kelly Allen at NAI/Latter & Blum Realtors. The site is on the east side of O'Neal Lane, between Lirocchi Road and South Harrell's Ferry Road. The seller was O'Neil Oaks Office Park, which purchased the property in two separate transactions in 2006. The total investment for O'Neil Oaks Office Park was $1.37 million in the property, and their sale to Pelican State Credit Union indicates an approximately 50% return on their investment over the 2-year holding period.

-- The property formerly occupied by The Acumen Group has been purchased by Performance Contractors. The 5.6-acre site situated on Perkins Road, between Pecue Lane and Highland Road, sold for $1.9 million. Grey Mullins with Beau Box Commercial Real Estate brokered the transaction. According to Mullins, the tract was improved with about 30,000 square feet of buildings, including an office and a number of office warehouses. "Performance Contractors' business has continued to expand, and Art Favre and Brent Boe of Performance Contractors recognized the necessity of future expansion, and purchased the property located directly across Perkins Road from their existing facility," Mullins says.

(Appraiser Tom Cook owns Cook Moore and Associates. Reach him at 293-7006 or TCook@cookmoore.com.)

Brian Andrews: Short term rates bottom out

According to meeting minutes released recently, the Federal Reserve is probably done with reducing short term interest rates. Their target rate, currently at 2%, is down from 5.25% one year ago. The Prime Rate, which tracks the Fed Target Rate, stands at 5%, down from 8.25% one year ago. So it looks as if we have gotten as much help from the Fed as we are going to get, at least in terms of interest rate reductions on floating rate debt.

The question is, how long the Fed will keep the rate this low? Most economists who follow interest rates expect the Fed to hold the target rate steady until the end of the year. Some think the Fed will increase the rate by a quarter point (25 basis points) in December. The wild card is inflation, which is dominant on everyone's minds these days. If inflation picks up, the Fed may be inclined to start raising the target rate sooner than later.

So enjoy the low floating rates for now. These days when I underwrite a floating rate deal, I add 200 basis points to the assumed rate to be conservative. When rates start back up, they might go up in a hurry and I need to make sure there will be some wiggle room in project cash flow to cover debt service.

(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Mortgage and he can be reached at brian.andrews@acmla.com.)

Real estate recap: North Baton Rouge shopping center sold; II City Plaza topped off

New owners for Brookwood Village: The Brookwood Village shopping center has been sold to local investors for $1.5 million. Kebett, a partnership made up of Kevin Bettis and Donald Joe Calloway, bought the 81,000-square-foot shopping center at the corner of Plank Road and Comite Drive. Rite Aid and Pizza Hut have stores in the shopping center. Bettis says plans are to bring more tenants into Brookwood Village, which lost its anchor Winn-Dixie store in 2005 and is currently 30% occupied. Auto Zone and Family Dollar have expressed interest in moving into the shopping center, he says. Movin' on up: The II City Plaza office building was topped off last week, as workers and developers marked completing the highest point of the 12-story structure. The Wampold Companies, which is developing the building, gave a free lunch and door prizes to the 350 workers who are building II City Plaza. Ted Terrell, vice president of development, says the lunch was to show appreciation for the work that has been completed. The building may have reached its highest point and the parking garage next door is set to open soon, but Terrell says the number of workers will remain at about the same level until early next year.