What does everyone think of the recent rapid building of properties particularly apartments in southern Baton Rouge? Anyone affected by it? Seems to me like rent has come down a little bit compared to last year or the year before. Anyone else?
Hello @Karen W. I haven’t seen it yet, but it is past due for rents to start to decline with the general consensus overbuilding in multifamily in the area. We expereinced an anomaly of “temporary” demand from the flood of August 2016 that delayed the expected declines and softening of the rental market. As people return to “permanent” housing, we’ll see how that unfolds. I’m looking forward the the Baton Rouge Trends meeting that provides an update of market data by each real estate category.
@Robert Leonard I don't have any multifamily, they're all SFH for now. Personally, I'm getting a bit apprehensive about investing more in the BR area. There's a ton of new building in the area and the population has been stagnant over the last few years. Definitely interested in what the Baton Rouge Trends meeting has to say. Would you mind providing a short summary of what the consensus is? I'm not in the area and would really appreciate it.
Well, remember, it’s always a good time to buy, when you buy right.
Here’s a good article from a good source of information on the BR market:
I just ran a small survey on the area in question on CoStar and it's not very promising for the area. The vacancy rate hovered between 6-8% from 2013-Q1/2016. But the multiple deliveries of new MF in the area caused a temporary spike to 10.3% that was then suppressed back down to 8% by what I would assume was the direct cause of the floods. But from what CoStar is showing, from the end of 2016 to the current quarter, vacancies have climbed by 5% to an overall rate of 13.5% for the area.
I would be curious to what your own thoughts are to what might have caused such a drastic change. I assume it's the deliveries of more class A properties and people moving back into their remodeled homes from the flood.
You can look at the slides from last year's multifamily market update, but there's a lot of context missing without the presenters narrative to explain the data presented.
I have no idea where CoStar gets its data, but my only guess is that the numbers are skewed by added units coming to market? I'm looking forward to next month's report, but last year occupancy rates were near 98% for the market. At some point a surge of vacancy seems logical as more of the displaced homeowners resettle into their homes and the new inventory keeps getting added.
The wildcard of it all is, how much new demand that will fill the vacancies at rates based on projected population growth. If the projections prove right and the new units match the demand, occupancy rates won't be bad. But if there's way more units available, than there is demand, that could be a big negative. Only time will tell!
Which projections are you referencing? The articles I’ve read all say BR’s population have been stagnant and that’s only because of migrants from other countries are replacing those who leave. Anecdotally, all my recent tenants are from out of stage. I’m praying for a surge in population of course! :)
@Karen W. I'm referencing the article I posted a link to in my second message above. It did not hyperlink for some reason. You will have to copy it and paste it to your browser.
I can't say that I've seen anything to support the articles that you've read. There are multi-billion dollar expansions of several refineries along the MS river and that is creating huge demand for housing. Although BR proper, is not growing nearly as fast as the surrounding suburbs, it's still growing.
@Patrick Geers CoStar is notoriously bad in terms of apartment occupancy data is tertiary markets. Also, Baton Rouge is a fairly integrated market, where there are a lot of old developments in Tigerland that are actually closer to campus than new student housing development. Might be skewing your data if you’re not familiar with the Baton Rouge multifamily market.
@Scott Anderson @Robert Leonard I appreciate the insight on how costar isn't reliable for BR MF. I work mostly in office/flex/industrial spaces in SoCal and they have very reliable data for the markets I'm in so I just assumed the BR MF data would be the same. Of course talking to brokers in the area is one of the best ways to find out the data for a market like BR, but what other places do you find reliable MF data for the area?