For the past few years, the annual Trends Seminar was a chance for local Realtors to hear about all the new construction projects going on around Baton Rouge. Today’s series of presentations was more about reassurance and trying to find bright spots in a market that has slowed down due to the national recession. “Stability is the new growth,” says Adam Knapp, president and CEO of the Baton Rouge Area Chamber.
Metro area home sales dropped nearly 24% for the 12-month period ending in February, when compared to the year before. That put the number of sales below what they were pre-Hurricane Katrina. But Tom Cook, owner of Cook, Moore & Associates, says sale prices were up by 2%, to an average of $201,700, and the number of days homes were staying on the market fell by more than 34%, to 95 days. “It’s the rate of sales that has slowed down,” Cook says. Difficulties in getting financing will cause residential development to dramatically slow down in 2009. “New subdivisions are non-existent,” Cook says. “It’s like someone turned off a spigot.”
One area that has remained strong has been the apartment market. Rents at 122 local complexes rose 3.6% from fall 2007 to fall 2008, while vacancy rates fell to 2.1%, says Wesley Moore of Cook, Moore & Associates. Moore says residents, especially those who live in the upscale complexes that have been built in the past few years, are staying in rental units instead of buying a house.
In other areas covered by the seminar:
— There’s little action in the retail real estate market, as companies have drastically cut back on new store openings and chains such as Linens N’ Things and Circuit City have gone out of business. About the only stores that are actively looking for more space are discount retailers and fast-food chains. “If you have a dollar in the name of your business, like Dollar General or Family Dollar or Dollar Tree, you’re doing well,” says Dottie Tarleton with Stirling Properties.
— Financing is available for projects, especially for apartment complexes, industrial sites and homes under contract. But the days of getting easy money are gone.
— The market for office space will remain slow until the national recession lifts and potential tenants feel better about the economy. The occupancy rate for top-quality downtown office space has dropped to about 85%, now that the II City Plaza is completed.
— The industrial real estate market is coping with a big glut of space, built with GO Zone financing. At the same time, tenants are downsizing and consolidating, like the recent closure of the Fraenkel Co. furniture warehouse and bedding plant.
