After last year’s strong commercial real estate market, the big question was whether the market could continue the growth into 2016 or decline after several big years.
Just three months into the new year, the answer to that question depends on who you ask.
Chris Pike, a commercial broker with Mike Falgoust & Associates, tells Daily Report he feels the market is down so far this year and moving a little slower, but he cannot point to one single factor as the culprit.
“I don’t think you can ever put your finger on one single thing,” Pike says.
Instead he identifies a number of factors: the depressed oil and gas markets, newly enacted taxes designed to balance the state budget, and the uncertainty brought on in a presidential election year. Of the latter, Pike notes investors and business owners were a little hesitant in 2008 and 2012 to spend money because they were unsure how the market would fall out following the election.
Other brokers also point to the slowdown in the oil and gas industry, as well as the state’s unstable budget situation as reasons to be wary of the market.
Real estate has always been cyclical in nature—growth and decline every seven years—and Pike says the Baton Rouge market is in year 10 of a growth phase.
“We’re in the 10th year of the peak, which means it’s overdue and the next phase is the decline,” Pike says. “I don’t mean this in a horrible way, it’s just the facts.”
Jonathan Walker, a commercial broker with Maestri-Murrell Real Estate, says large developments that have already broken ground could help carry the market in 2016, which he says has experienced five years of strong retail.
“It’s probably going to be somewhat of a slower year, but developments that have broken ground and continue to expand their retail footprint have continued to fill their space,” Walker says.
Some brokers say the market has been solid so far this year.
Mathew Laborde, a commercial broker with Beau Box Commercial Real Estate, says he has not noticed a difference in the activity level this year, and he is closing the same number of deals that he did in 2015. Interest is high in the office market, especially garden office parks built in residential-style designs, he adds.
Charlie Colvin, another commercial broker with Beau Box, agreed with Laborde, saying activity has been brisk so far and tenants are constantly looking for new sites—particularly those with optimal access and a prime location.
But Colvin says from his vantage point, the office market is a little softer this year, and may be affected by the low oil prices. He, too, agrees demand declines in presidential election years.
“It’s happened in years past, and could happen again as the election gets closer,” Colvin says.
Ben Graham, managing director of SVN I Graham, Langlois & Legendre, says he feels the commercial real estate market has been active over the last year or so and he expects it to remain an attractive investment option as investors seek stability among global financial markets.
“With increased confidence in the economy and lower unemployment rates, vacancies will continue on a downward trend as more space is absorbed across all Baton Rouge area (commercial real estate) sectors,” Graham says.