New Orleans area apartment rents, occupancy rates continue to rise

In a trend drawing attention from national investors, the New Orleans area apartment market continues to see rising average rents and occupancy rates, according to a report by local analysts in the multi-family housing industry. Algiers saw the biggest recent uptick in rents and lived-in units, while New Orleans’ historic core neighborhoods and St. Tammany Parish show the most potential for future development, the reports says.

The report is issued twice annually by apartment brokers Larry G. Schedler & Associates, the mortgage firm Madderra & Cazalot and the Multi-Family Advisory Group in Metairie. It is based on a survey of 130 properties including more than 30,400 units over the six-month period that ended in April.

“The greater New Orleans apartment market is experiencing a period of stability with a sustained growth in occupancy and rents it has not seen in more than a decade. Today market rate occupancies are at 93 percent, and average rents are $1.02” per square foot, the report says. “Combined with historic low interest rates and associated financing costs, apartment owners are experiencing exceptional returns.”

Occupancy rates averaged 90 percent to 96 percent for for all but one of the eight sub-markets in the study: eastern New Orleans, Algiers, Gretna-Harvey-Terrytown, Metairie, Harahan-River Ridge and St. Tammany Parish.

Kenner was the dim spot in the market, with declining numbers of occupied apartments and lower rents compared to the previous six months. The average rent was $813, down from $821, and about 81 percent of apartments were occupied.

In Algiers, average monthly rent increased from $698 in the fall of 2012 to $727 in the spring, and occupancy rates increased by 6 percent, the biggest uptick in the metro region. Investors have taken apartments out of the rental market for refurbishment and many of those units are now coming back online, Schedler said.

Schedler said increases in rent can be attributed to an expected spike in flood insurance premiums in flood-prone areas. Congress last year put an end to subsidies in the National Flood Insurance Program, although some federal lawmakers are working to reverse the change.

“I don’t think it has been a windfall from an owner’s perspective necessarily because they do have to anticipate increasing costs of insurance,” Schedler said.

Residents in the city’s “historic center” — defined in the report as the French Quarter, Warehouse District, St. Charles Avenue corridor, Mid-City and Downtown — paid an average of $1,291 in monthly rent, the highest in the area. Those averages ranged from $926 for a studio apartment to $1,745 for a three-bedroom, two-bathroom unit.

A one-bedroom, one-bathroom apartment in the city center fetched an average of $1,153 — by far the most expensive place to lease a one-bedroom, according to the report.

One-bedroom units elsewhere averaged: $612 in eastern New Orleans, $656 in Algiers, $722 in Gretna-Harvey-Terrytown, $699 in Metairie, $820 in Harahan-River Ridge, $718 in Kenner and $863 in St. Tammany Parish.