Although the Baton Rouge apartment market remains strong, the dramatic increase in the number of new units completed or planned is starting to have an impact on rental trends in the area.
Experts say the market will likely see higher vacancy rates, increased concessions and more competition as a result of all the new development.
As detailed in a feature from the 2016 Real Estate Report, a Business Report publication, older apartment complexes will likely be hit harder, as they try to compete with newer affordable and luxury units coming onto the market.
In the three-year span between 2015 and 2017, the number of new units built, currently under construction or proposed is 7,824.
Accounting for increasing population, decreasing household sizes and replacement of physically or functionally obsolete apartments, oversupply will result. Couple this with enticing amenities, older complexes are pressured even more to undergo extensive renovations just to stay competitive.
The majority of apartments currently under development are affordable units or luxury units, most which feature more community amenities—gyms, pools, coffee bars, meeting rooms and common areas—than older complexes typically do.
“If you let your property become less functional with technology, or you just let it get worn, you’re inevitably going to see a deteriorating tenant base,” says Wesley Moore, a partner with real estate appraisal firm Cook, Moore and Associates. In some cases, older complexes will likely be torn down.
Some older properties already are showing signs of struggling to maintain their vacancy rate, which has remained consistent with historical norms of slightly under 6% in Baton Rouge.
“Some of the older complexes, those built in the late ’80s, are struggling to lease up,” Moore says, adding their occupancy rates remain in the upper 80th percentile for now.
Read the full 2016 edition of Real Estate Report for this and more stories on the local real estate market. Send your comments to editors@businessreport.com.
