By: Robin Shannon, Managing Editor June 16, 2015
Bella Ridge apartments opened this month in Harahan. (CityBusiness staff photo)
A combination of strong demand and a lack of available buildable land is helping the area’s multi-family market remain near full occupancy.
But despite the limits on space, interest in building apartments in the New Orleans area is still at its highest level since 2001, according to a survey on market activity for the first half of the year.
The Greater New Orleans Multi-Family Report, a twice-yearly market analysis compiled by boutique multi-family real estate firm Larry G. Schedler & Associates and mortgage banking professionals Madderra & Cazalot, keeps tabs on more than 300 rental communities throughout Orleans, Jefferson and St. Tammany parishes. The spring report represents the 25th edition.
The survey lists the average rent for apartments in the region at $933 as of May, a $14 increase from October figures and a $24 jump from the same time last year. The figure includes studios and one-, two- and three-bedroom market-rate apartments.
Total occupancy across the eight submarkets covered in the report is 94 percent, same as the fall report and unchanged since last year.
The most expensive units and most popular are in the Historic Center, which includes the French Quarter, Warehouse District, St. Charles Avenue, Mid-City and downtown. The average rent is $1,414, or about $1.64 per square foot. Broker Larry Schedler said newer market rate developments downtown are obtaining rents higher than $2 per square foot thanks to an increase in construction costs and operating expenses in the urban area.
Occupancy in the Historic Center remains steady at 94 percent, dropping just one percentage point from the fall figures.
The lowest rates in the area are in eastern New Orleans, where the average rent was $719, about $13 higher than last year. Occupancy in that submarket is steady at 94 percent.
Although high construction costs and geographic limitations have kept building activity down, the report notes that more than 1,400 new apartment units are either under construction or primed for leasing.
Mark Madderra, a principal for Madderra & Cazalot, noted that New Orleans is attracting the attention of outside investors. He said high occupancy, increasing rents and low financing have helped make the area favorable to new development.
The downtown submarket continues to command the greatest interest. Of the 1,446 units considered “new construction,” 886 are located in the historic core.
Madderra said the figure does not include the units under construction as part of the ongoing re-development of the former Iberville Housing Development.
Downtown buildings with units now leasing include The Strand at 225 Baronne St., with 192 units; Four Winds at 210 Baronne St., with 260 new units; and The Howard at 833 Howard Ave., where 18 units are now leasing.
Meanwhile, another 419 units could be added in the next 12 to 18 months as projects at the California building, 1111 Tulane Ave., Belmont Commons, 925 Common St., Factors Row, 401 Carondelet St., and the third phase of South Market District, continue to move forward.
In the suburbs, Favrot & Shane Cos. recently completed its 264-unit Bella Ridge development in Harahan and Wisconsin-based Continental Properties is moving forward with construction of 296 units as part of the Fremaux Town Center in Slidell. Units are expected to be online by the end of the year.
Madderra said many other sites are under consideration in the eastern western portions of St. Tammany, but have been delayed by construction costs. He said some new activity could break ground later this year.