Market Reports

New Orleans Apartment Market is Performing Well Due to High Barriers to Entry

by John Nelson December 5, 2022

Increased interest rates and challenging insurance costs would normally stifle a multifamily market. However, an inventory constrained by a lack of land, supply chain issues, labor shortages and the increased cost of homeownership have contributed to a further stabilization of the metro New Orleans multifamily market. The overall vacancy factor for our seven primary submarkets that make up metro New Orleans are in the 5 to 6 percent range. We anticipate occupancy rates to steadily increase going forward as new construction has stalled and rising interest rates have delayed many tenants from transitioning to homeownership. Overall rental rates in the metro average in the $1,250 to $1,350 per month range. The rents represent a 3.5 percent increase over the past 12 months. It should be noted that some submarkets have seen considerably higher increases. The highest rental rates reported in the metro for garden-style communities are in Eastern St. Tammany Parish, where the newest inventory exists. The highest rents in New Orleans are downtown in the CBD/Warehouse District. These communities comprise mid-rise and high-rise developments and command rents exceeding $2.50 per square foot. The downtown market experienced some softness during the COVID-19 pandemic but made a robust recovery once restrictions …

December 5, 2022

Louisiana Market Reports Retail Southeast Southeast Market Reports

Plenty of Opportunities Exist in New Orleans Retail Sector, Despite the Headwinds

by John Nelson November 28, 2022

New Orleans has seen significant, pent-up retail growth over the past 12 months as we emerge from the COVID-19 pandemic. More recently, however, external forces have provided some headwinds and caused tenants and investors to go back to their corners to reassess. Inflation, rising interest rates, insurance premium increases and elevated construction costs have all contributed to uncertainty in the Greater New Orleans retail landscape. Within the French Quarter and CBD, growing concerns from crime have forced some CEOs to look outside of the city core for their office headquarters. This issue, coupled with the current “work-from-home” environment, causes downtown retailers to rely even more on tourism and convention business. Thankfully, the hospitality sector has had success and is now exceeding pre-pandemic levels. Due to an active 2021 hurricane season that saw Hurricane Ida devastate South Louisiana, insurance rates have skyrocketed as carriers continue to leave the state. As a result, landlords have struggled with how to handle these unforeseen spikes in expenses. Should they pass those on to the tenant or eat them to remain competitive, or a combination of the two? 2022 has been a surprisingly quiet storm season, so with any luck these rates should begin to …

November 28, 2022

Louisiana Market Reports Office Southeast Southeast Market Reports

See You at Work: New Orleans Employers Rethink the Office Environment

by John Nelson November 21, 2022

In the post-pandemic environment where employers are trying to navigate new work schedules, office tenants are focusing more on the finish and design of office space than they are the rents. In New Orleans, we are seeing office tenants rethink the concept of office space altogether, and their employees are thinking differently about their individual offices as well. There has been a shift from the traditional office space of years past where one spends eight hours a day in a large private office with the door closed. The office has evolved into more of a social place. Companies want their employees to come back to the office and not to be fully remote. Many employees want to get out of their pajamas and come back to the office. But, getting them all to come back has proven to be the challenge. Companies are now enticing their employees with redesigned spaces that are more aesthetically pleasing and rich with amenities that allow for more social interactions and collaboration. Employees who work remotely a few days a week are coming to the office because they want that engagement with their colleagues. Tenants are now less interested in refurbishing private offices and spend …

November 21, 2022

Industrial Louisiana Market Reports Southeast Southeast Market Reports

Two Proposed Port Container Projects Could Catapult NOLA’s Industrial Sector

by John Nelson December 28, 2021

The current state of the New Orleans industrial real estate market can best be described as “dichotomic.” On the one hand, New Orleans has the stability of a mature market featuring one of the largest and oldest ports in North America, traditionally serving heavy industry that continues to perform. On the other, you have two new proposed container port projects that could significantly alter the landscape of the industrial real estate market for the foreseeable future. Like so many other markets across the country, the New Orleans area is gaining its fair share of distribution facilities, with Amazon and the like scrambling for sites to service increased consumer and business-to-business demand. That said, the real game-changer for the distribution sector will ensue when at least one of the two announced container port projects in the New Orleans area comes on line. The Port of Plaquemines and the Port of New Orleans have both identified sites with access to rail, major roadways and water-based transport options that would fundamentally alter the opportunity for distribution emanating out of the New Orleans area. Either project would instantly create a great demand for warehousing and distribution space and further diversify the industrial asset class …

December 28, 2021

Louisiana Market Reports Multifamily Southeast Southeast Market Reports

NOLA’s Apartment Market Remains Stable as Occupancy Gains Momentum

by John Nelson December 21, 2021

Like the rest of the country, metro New Orleans is slowly coming out of the COVID-19 fog. The uncertainty of these uncharted waters caused a lot of anxiety for multifamily owner and operators. Although there were some challenges, the market has survived the pandemic surprisingly well. The overall vacancy factor for the city is in the 5 to 6 percent range and should compress further given the modest pipeline of new inventory coming on line. The highest vacancy rates reported are in Algiers (15 percent) and East New Orleans (12 percent) where the majority of service and tourism workers lived and the most affected by COVID-19. It should be noted that we feel this downturn in occupancy is temporary and is showing signs of recovery as our tourism industry slowly rebounds. The Downtown/Warehouse district also experienced increased vacancies as residents fled the urban market for the suburbs with communities reporting vacancy rates as high as 15 percent. As the height of COVID-19 dissipated, the submarket rebounded strongly with many communities reporting 92 to 95 percent occupancy. Although previous years have seen a host of new developments enter the Downtown submarket, currently there are only two communities in the pipeline that …

December 21, 2021

Hospitality Louisiana Market Reports Retail Southeast Southeast Market Reports

New Orleans Lays Ground Work for a Return to a ‘Wonderful World’

by John Nelson December 14, 2021

“I see friends shaking hands, saying how do you do…” Like many urban city centers, New Orleans has faced unprecedented challenges from COVID-19 over the past 19 months. The metro area lost more than 85,000 jobs between second-quarter 2019 and second-quarter 2020. In an economy heavily reliant on tourism, Orleans Parish was the most impacted with over 41,000 jobs lost, predominantly in the hospitality sector. Retailers — and their employees — depend on the large boosts of economic activity provided by large-format gatherings such as conventions and festivals like Jazz Fest, French Quarter Fest, and Mardi Gras, all of which were cancelled for the past 24 months. Additionally, the very active hurricane seasons of 2020 and 2021 resulted in devastation from three major storms in economic centers along our coastal community. New Orleans is still navigating clean-up efforts following Hurricane Ida, which landed Aug. 29, while real estate developers, builders and tenants face even more pricing and timing challenges due to material and worker shortages that were further hindered by storm activity. However, we are marching in the right direction. Cruises are resuming from Port of New Orleans (Port NOLA). Business travelers are getting back on the road. Offices are …

December 14, 2021

Louisiana Market Reports Office Southeast Southeast Market Reports

New Orleans Office Sector is in Rightsizing Mode as Tenants Downsize Footprints

by Alex Tostado December 16, 2019

With the recent influx of young talent, combined with the area’s thriving economy and renowned vibrant culture, the Greater New Orleans region is poised for growth. Although the office market sector is slow to show any significant gains, this signifies a potential undervalued opportunity for users. The metro area has nearly 20 million square feet of office space, including over 11 million square feet of Class A space with a published occupancy rate exceeding 87 percent. The predominant trend is a rightsizing of the market, resulting in more downsizing than growth. On a macro level, the oil and gas industry is phasing out, which has historically been a prominent space user. The conversion of office space into alternate uses also continues, as well as a reduction in company footprints. The outlying suburban office market has seen the most growth, with East Metairie being one of the strongest submarkets in both occupancy and rental rates. With less product in the area, supply and demand are closer to equilibrium. New Orleans’ central business district (CBD) and downtown office submarkets are coasting along. Class A occupancy rates are slightly down from last year, but rents have inched up to high-teens and low-20s. The …

December 16, 2019

Louisiana Market Reports Multifamily Southeast Southeast Market Reports

Tight Multifamily Occupancy in New Orleans Leads to 2,285 Units in the Pipeline

by Alex Tostado December 9, 2019

New Orleans (also known as Crescent City, The Big Easy and NOLA) is unique in many ways. The cuisine, architecture and music all set the city apart, but for the real estate industry, the geography is most important. In fact, it’s uniqueness among the great Southern cities is that the Mississippi River, Lake Pontchartrain and the wetlands to the east and west have created a barrier to entry unlike any other multifamily market in the country. These factors have limited development to a select few urban sites and redevelopment of historic structures. Garden-style product has been primarily confined to St. Tammany Parish located north of Lake Pontchartrain. The parish has an abundance of land as well as the demographic profile to support new market-rate construction. The multifamily market in metro New Orleans is further strengthened by the positive economic growth the city has experienced. The local and regional economies continue to see growth in the following sectors: energy, advanced manufacturing, international trade, healthcare, education, bio-science, tourism and technology. One example is DXC Technology’s new Digital Transformation Center located in downtown New Orleans. This new employer will create 2,000 well-paying jobs and provide further stability to the downtown multifamily market. The …

December 9, 2019

Louisiana Market Reports Multifamily Southeast Southeast Market Reports

New Orleans Adds Another Chapter to its 300-Year History Book of Multifamily Growth

by John Nelson January 21, 2019

How many cities can boast a multifamily history that goes back 300 years? New Orleans can, as it is celebrating its Tricentennial. New Orleans is home to the first apartment building in the United States. Historians have noted the “oldest continuously rented” multifamily development in the country is the Pontalba Apartments. Built in 1849 by the wealthy Baroness Michaela Pontalba, the iconic apartment’s crown molding, sconces, iron railings and balconies are now synonymous with New Orleans architecture. The Pontalba Apartments occupies prime real estate at the east and west side of the historic Jackson Square in the French Quarter. And yes, there is a waiting list to lease a unit. Today the city that sits on the bend of the Mississippi River has a limited amount of land, which keeps the equilibrium between supply and demand in sync. Thus new development is confined to urban infill locations, adaptive reuse projects or the few submarkets with available land — primarily located to the north of Lake Pontchartrain. Households that have income levels necessary to support the rents required for new properties are fueling market-rate development. The NOLA metro market has an inventory of approximately 54,000 units situated in nine distinct submarkets. …

January 21, 2019

Industrial Louisiana Market Reports Southeast Southeast Market Reports

Adaptive Reuse in Core New Orleans Pushes Industrial Activity Westward

by John Nelson January 14, 2019

When real estate professionals think of the New Orleans industrial market, oil companies, the Port of New Orleans (recently rebranded Port NOLA) and distribution companies come to mind. That thought is currently undergoing an evolution. The historically industrial areas of New Orleans are being absorbed seemingly daily by an insurgence of retail and entertainment-based business. As traditional retail in American shopping and strip malls is on the decline, developers are rushing to buy warehouses for physical entertainment and non-traditional uses. Port NOLA used to be home strictly to cargo ships and tankers, but is now expanding to fill the need of cruise ships. Norwegian, Carnival and the newly announced Viking Cruise lines all now use it as a docking port. The $2 billion port master plan encompasses the growth needs of the cruise ships, as well as the recently announced deepening of the Mississippi River’s main channel to 50 feet. However, Tchoupitoulas Street warehouses that once served the port are being turned into cross-training gyms and breweries. High-profile industrial properties are in huge demand. Drive Shack, a competitor of popular Topgolf, is developing a $29 million venue at the old Times-Picayune newspaper site owned by Howard Investors LLC, which is …

January 14, 2019

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