New Orleans Adds Another Chapter to its 300-Year History Book of Multifamily Growth
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. Rental and occupancy rates vary by submarket due to location and vintage of properties.
Average rents throughout the metro are approximately $1 per square foot with newer suburban developments leasing in the $1.15 to $1.25 per square foot range. The majority of these developments are located in St. Tammany Parish. The highest average rental rates reported are in the Central Business District/Mid-City submarket where rates average $1.70 to $1.80 per square foot, with some communities commanding rents as high as $2.85.
Overall metro occupancy has been steady at 93 percent with some properties reporting levels exceeding 96 percent. Currently, there are approximately 1,800 units under construction in the CBD/Mid-City submarket. The locations primarily consist of mid-rise developments on infill sites.
Notable projects include The Jung Residences (113 units) located in the historic Jung Hotel being developed by MCC Real Estate. Another significant project underway is Lumina on the Greenway (382 units) situated on the Lafitte Greenway, a 2.6-mile walking/bike trail in the heart of New Orleans. Edwards Communities plans to build the property in two phases, with delivery of the first phase scheduled for 2019.
An especially pioneering project under development is Odeon Apartments, which once completed will be the tallest building constructed in New Orleans in 30 years. The mixed-use project will have 271 apartments, 200 parking spaces and 12,000 square feet of retail space. Odeon is being developed by The Domain Cos. Domain has been active in the New Orleans metro area for over a decade. Odeon is scheduled to open sometime in 2020.
A garden-style development is currently under construction north of Lake Pontchartrain by the Dobbins Group. The 272-unit luxury community, known as LeVau, is located along the Interstate 12/Highway 190 corridor in Covington.
Investor demand to acquire multifamily assets in metro New Orleans is stronger than it has ever been. Over the past 24 months we have seen multifamily conveyances in excess of $600 million. The profile of buyers includes private and foreign capital, family offices and institutional equity.
New Orleans is a market with three centuries of history. The future looks bright and is poised for controlled growth and stability. All indices point to a market that is well positioned for future growth.
— Larry Schedler CCIM, Principal; Cheryl Short, Principal; and Christian Schedler CCIM, Principal of Larry G. Schedler & Associates Inc. This article originally appeared in the October 2018 issue of Southeast Real Estate Business.