Experts are forecasting a cooling-off period for Baton Rouge’s student housing market in 2017, following a years-long boom that has led to a spate of apartment developments throughout the LSU area.
Currently, Baton Rouge is one of the strongest markets in the country for student housing, says LSU Real Estate Research Institute Assistant Director Brian Andrews. There has been a good deal of new construction in recent years, especially in the Burbank Drive corridor.
But that growth, and corresponding high unit prices, are not expected to last, Andrews says. LSU is increasing its presence in the market with student housing at the mixed-use Nicholson Gateway project. That, coupled with an unsustainable amount of construction, will make for some belt-tightening, he says.
“That’s not good news for some of the people that are out there catering to the student market,” Andrews says. “You have a stagnant number of people looking for an increasing number of housing units. The only thing that can happen is for rents to go down.”
Location will be key, Andrews adds. The complexes within walking distance of classrooms, like the Nicholson Gateway project, will be much more desirable, while developments along Burbank further from campus will see a decline, he says.
Craig Davenport, a commercial appraiser and market analyst for Cook, Moore & Associates, says the market last year was actually boosted by flooding, with some non-students moving into multifamily complexes near LSU. But in the upcoming year, fewer new units will come online than in the past, and cuts to TOPS will leave a big question mark on enrollment counts in the fall.
“If there is a hit at all, and there may not be, you’re going to see it next fall,” Davenport says, adding he expects a downturn in the market if TOPS cuts stay in place in the coming school year. “I suspect next year all the factors point to a cooling-off period.”
Lawmakers last year took an ax to the popular TOPS scholarship program, which pays college tuition for certain in-state high school graduates that meet average academic benchmarks. The Legislature reduced spending on the program and “front-loaded” it, meaning TOPS students had to come up with a big chunk of their tuition for the current semester.
But enrollment figures are steady so far for the spring semester, Daily Report wrote last week, largely because students make enrollment decisions based on the whole year, not by semester. Davenport says the same goes for student housing, and if TOPS is cut for next academic year, more students are likely to stay at home.
Park 7 Apartments, a 280-bed Southgate development, and the River House mixed-use development, which could draw some students to its luxury units, are both expected to open this year. Davenport says several flooded student housing complexes will come back online soon.