While the multifamily market in Baton Rouge remains strong for now, a staggering number of new apartment units completed in 2015—with many more on the way in 2016 and 2017—will likely cause vacancy rates to rise and lease rates to fall.
According to data presented this morning by Craig Davenport of Cook, Moore and Associates at the Greater Baton Rouge Association of Realtors’ annual Real Estate Trends seminar, more than 1,500 new units were completed in 2015. An additional 3,100 are under construction or have already been completed this year, and nearly 3,200 more are proposed for construction by the end of 2017. That’s not including several high-profile projects like Rouzan and The LSU Gateway project on Nicholson Drive, both of which have been announced but have not yet put forward specific plans.
“The amount of construction is impacting our market,” Davenport said. “This could last for a year or two while we absorb all these units.”
Much of the new inventory in 2015 was in student housing. Of the 1,531 units completed in 2015, more than 800 were student housing units. An additional 1,489 student housing units will be added to the market over the next two years. That’s significantly more inventory than the market can absorb, based on student enrollment data from LSU, Davenport said.
“You’re going to have an issue with occupancy in the student market and that doesn’t include anything LSU is building and that doesn’t include any impact changes to the TOPS program will have on the local market,”’ he said. “So this is one to watch.”
All of the new inventory on the market is forcing property owners to offer more concessions to their tenants, including high-end amenities like the lazy rivers, rec rooms and golf simulators in some of the student housing complexes near LSU. It’s also prompting the owners of older complexes to start renovating them.
“If you’re a pig, now’s the time to get out the lipstick,” Davenport said.
Looking forward to the second half of 2016 and 2017, Davenport says expect lease rates to decrease and vacancy rates to increase.
Also, to see more concessions.
“Concessions are here to stay and will stay for awhile,” he says.
—Stephanie Riegel
