For the commercial real estate market in Baton Rouge, 2015 was another boom year—the third in a row. Sale prices in the local market broke all-time records, and out-of-state investors flocked to opportunities in the Capital Region, particularly in the multifamily sector.
As Business Report details in its new cover story highlighting the top 10 commercial sales of 2015, a couple of factors drove the activity. One was the availability of cheap capital. With interest rates so low, investors are looking for places to spend money, and they like what they see in Baton Rouge.
“The cost of money is historically low, and that has opened up all sorts of opportunities,” says Wesley Moore, an appraiser with Cook Moore and Associates. “We had some major deals this year that almost nudged us out of being what investors consider a tertiary market and into a secondary market.”
Also driving activity was demand for more student housing near LSU. Rental rates, priced by the bed and not the unit, continued to increase, as did occupancy. As a result, out-of-state companies that specialize in student housing continue to see the area near the south campus gates as something of a gold mine.
“On the apartment side there is a lot of outside investment,” says Ty Gose, a realtor with NAI/Latter and Blum. “They’re looking to our market for higher returns, higher use and in some cases they’re getting sticker shock.”
It’s not scaring them away, though, and for now the growth is expected to continue. Says Moore: “The market is so healthy it’s almost scary.”
On the business side, the Capital Region saw its share of significant megadeals last year, though the number and scope of major projects announced in 2015 were not as impressive as in 2014 and 2013.
The industrial sector continued to dominate the activity, even as oil prices continued their slide throughout the year from $50 per barrel in January to less than $40 per barrel in December. Still, much of south Louisiana’s industrial growth is fueled by low natural gas prices—not oil prices—so while the pace of expansion slowed a bit it showed no signs of stalling.
See the full lists for both the top 10 commercial sales and top business deals. Also, as part of the new Business Report cover package, read about the record-breaking year for home sales and the top 10 most expensive homes sold in 2015.
