Retail vacancies in the greater Baton Rouge market have climbed to 8.9% this spring from 7.9% in spring 2015, but the insulated market still is solid thanks to developers opting to stay away from speculative building, according to an expert at today’s Real Estate Trends seminar.
“I think that’s healthy for our market,” says Jonathan Walker, of Maestri-Murrell, who presented data on the market.
The greater Baton Rouge area is coming off a record year in 2015 for retail rentals. Walker calls 2015 a “unicorn”—a year that wasn’t supposed to exist. Last year rental rates rose and occupancy rates were down, he said.
“The unicorn has died,” Walker said.
Vacancies are up in the greater Baton Rouge market, but the rate is in line with the national average of 8-9%, according to data offered at Trends. However, the area is not following the trend in national rent growth, which increased about 1-2% at the end of 2015. Walker said the average rent in Greater Baton Rouge decreased 5% as well.
That’s not terrible, he said. The greater Baton Rouge area still has a good real estate market. There aren’t any extreme highs or lows.
“If you look at the national vacancy rate you’ll go, ‘Well golly, we’re higher than the rest of the country.’ These are major markets that we’re getting compared to,” Walker said. “And remember the Houstons of the world—when it’s good it’s good, and when it’s bad it’s terrible.”
Walker attributes the tendency of developers to line up tenants before building, as opposed to building first and waiting for tenants, as one of the key reasons the market is insulated from experiencing highs and lows.
An example is The Greens at Millerville, which has already lined up tenants such as the much anticipated Buc-ee’s and several others before breaking ground for construction, Walker says.
Another trend occurring in the retail market is big box retailers downsizing to smaller brick and mortar sites. “We’re going to see a lot of consolidating where retailers become a little bit smaller and it becomes almost like a showroom,” he said.
For example, Rooms To Go is leaving its current 55,000-square-foot location on Siegen Lane and moving into a 40,000-square-foot building down the street on 3.13 acres.
“They’ve got better access. They’ve got better visibility. People are going to drive around to the back of the building,” he said. “This is kind of the wave of the new retail.”
Hobby Lobby has signed a lease for the the current Rooms To Go building, Walker says.
—Alexandria Burris
