Baton Rouge was among the metro areas with the highest multifamily rental vacancy rates during the first three quarters of 2018, according to data from the National Association of Realtors.
For the year’s first nine months, Baton Rouge’s multifamily vacancy rate hovered around 7.8%, up from 6.8% the previous year as well as above the national average of 7.0%.
“We’re seeing even higher [vacancy] numbers than what they’re reporting,” says Craig Davenport of Cooke, Moore, Davenport & Associates, who is compiling research for the 2019 Greater Baton Rouge Association of Realtors’ Trends Seminar in May. “Right now, our area can’t absorb the number of new units being built.”
As has been the local trend for the past two years, apartment supply is outpacing demand. Vacancies, says Davenport, are most common in areas where there is new construction, with 40% of complexes offering rental concessions as of last year.
Up until a couple of years ago, Baton Rouge saw the construction of some 750 units a year. But in 2017, roughly 1,100 apartment units were built in Baton Rouge, according to data provided by Davenport. Last year, that number more than doubled to 2,300, which is about how many are now under construction.
Ironically, the city’s apartment occupancy problem comes at a time when the multifamily market is strong in most metro areas across the country. Among the largest 75 metro areas, vacancies have dropped to less than 5%, indicating significant potential for multifamily commercial investment.
Nationally, Baton Rouge ranks 54th in occupancy rates out of the 75 metros studied. Apartment vacancy rates are the lowest in the Fresno, California area (1.9%) and the highest in the Charleston, South Carolina area (18.0%). Read the full report.