Shortly after the historic flood last August, every vacancy in the seven Baton Rouge apartment complexes overseen by A.C. Lewis Management quickly gained a tenant, says CFO Brian May.
As Business Report details in a new feature in the current issue, the company instituted three-month leases specifically for people who needed immediate shelter. May says his firm didn’t jack up rates to take advantage of the situation, although not every building owner and manager had the same philosophy.
Roughly seven months later, his company still is “leasing strong,” he says, with occupancy rates in the high 90% range. But he’s seeing a lot of turnover, as he normally would this time of year, and the market isn’t nearly as tight as it was last fall.
“It almost looks normal to me now,” May says.
Craig Davenport of Cook, Moore and Associates recently spent several months putting together the annual “state of the union” report for the Baton Rouge Apartment Association. As one would expect, he found an increase in rental rates across the board and few vacancies, but average apartment rents don’t appear to have skyrocketed.
The current vacancy rate is about 2% to 3%, Davenport says. Before the flood, the rate was at 6% and rising, as an unusually large amount of new supply entered the market.
“A lot of complexes are 100% occupied now,” Davenport says. “When the flood hit, that helped a lot of the properties’ occupancy issues out.”
Last year at this time, Davenport says, about 20% of the apartment complexes were offering concessions such as move-in specials, discounted rent, free cable and so on. All that ended after the flood.
He says the average rental rate is up about 4% to 5% from last year, which is nothing like the double-digit increases seen after Hurricane Katrina. ApartmentList.com reports that average rents were 7.8% higher in Baton Rouge this February compared to the same month last year.
“It wasn’t like Katrina, where you had a mass amount of people flooding the market, moving here, and knew they were going to be out of their houses for six to 12 months,” Davenport says. “I think this was a shorter expected term, although I think it’s dragging out longer than most people realize, mainly because we haven’t seen a whole lot of government funding come in to help out.”
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