Real estate report: Multifamily market softens as supply rises

The Baton Rouge metro’s multifamily real estate market is showing signs of softening after several years of strong occupancies and rents, due in part to slowing absorption rates and an uptick in new apartment construction.

That’s according to Craig Davenport of Cook, Moore, Davenport and Associates and Mark Segalla of Elifin, who spoke at the annual Trends seminar sponsored by the Greater Baton Rouge Association of Realtors on Thursday.

The local apartment vacancy rate has climbed from 5.36% to 7.46% over the past 12 months. Over the same period, rents increased by nearly 5% year over year to reach an average of $1.31 per square foot. By comparison, rents increased by 10% from 2021 to 2022, meaning the market is now moderating.

A key driver of the rising vacancy rate is the influx of new units entering the market. In 2024 alone, more than 2,000 new units were delivered, and another 1,793 units are currently under construction and slated for delivery this year or next.

The wave of new supply is the latest phase of a decade-long construction boom. Between 2015 and 2024, 12,934 units were delivered to the market. That’s a roughly 86% increase from the previous decade, which included the post-Katrina population surge that brought with it a spike in housing demand.

Job growth remains critical to the absorption of new supply. The good news is that the local job market has mostly recovered since shedding 5% of its employment base in 2020 due to the COVID-19 pandemic. Unemployment is now hovering around a historic low of 4%, though it should be noted that total employment dipped slightly year over year at the end of 2024.