Demand for New Orleans apartments outpaces supply
NEW ORLEANS (AP) — Demand for apartment housing continues to outpace supply throughout the city, leading local real estate analysts to declare the New Orleans area rental market remains strong moving into the final weeks of 2013.
And looking ahead to 2014, new construction isn’t expected to put much of a dent in the need for additional units.
The average rent in New Orleans and Jefferson and St. Tammany parishes reached about $900 a month at the end of October, up from $877 from the same time last year according to the newest Greater New Orleans Multi-Family Report. The boutique real estate business Larry G. Schedler and Associates and mortgage banking firm Madderra and Cazalot produce the report twice a year.
Their research shows the occupancy rate for the apartments they track in the New Orleans market is to 94 percent through October, with some submarkets showing a 96 percent rate.
“I’ve been doing this for 30 years, and these past couple years have been the first time I have not had to sell New Orleans to outside investors,” Schedler said. “They see a market that still has further room to strengthen.”
According to the report, the highest rental increases in the past year are in the city’s Historic Center, which includes the French Quarter, Warehouse District, Central Business District, Mid-City and the St. Charles Avenue corridor.
Monthly rent is up $62 to $1,329 per month. Other notable increases include Metairie, where rents average $783, and Harahan, where rates have gone from $931 in 2012 to $954 this year.
“There continues to be an increased acceptance of multifamily living,” Schedler said. “New projects that have come online in the past year, like the Hibernia Tower Apartments and the American Paint Works Building, opened with occupancy above 90 percent.”
Developers have also started to become more willing to move forward with projects that don’t involve tax credits.
Mark Madderra, a principal partner at Madderra and Cazalot, said five construction projects currently underway in the metro area will add 777 market rate units to the fold without the benefit of tax credits.
“That number doesn’t factor in other projects in the CBD and in St. Tammany Parish that have been announced but have yet to begin construction,” Madderra said. “Units under construction could balloon to more than 1,200 as we get into 2014.”
Two projects are under construction in the Central Business District. The first is at 144 Elk Place, where developer Mike Wampold is converting an office tower into loft apartments, retail and parking. The second, Paramount, is in the first phase of the South Market District.
Two additional projects — The Garage at 849 Carondelet St. and redevelopment of an office tower at 225 Baronne St. — are expected to move forward in the next six months.
Madderra said once those projects get underway, there will be few options left in the CBD where a converting an existing building to apartments is feasible.
“Everything has already been claimed for redevelopment,” he said. “Some new construction is still on the horizon, but activity is going to slow.”
Outside of the CBD, the bulk of the construction activity continues to take place on the North Shore. A second phase of the Brookstone Park development in Covington will add 112 units and The Retreat at Canterbury in Slidell will add another 48 units.
Two other projects in the Covington area — Reagan Crossing and Faubourg St. John, each with 244 units — also have been announced.
“This activity is a product of an increase of office and retail growth on the North Shore,” Madderra said. “More people are working in those areas and people want to live near where they work. It isn’t affecting occupancy on the South Shore, just adding more units to the fold.”