The Greater New Orleans industrial real estate market in 2025 is characterized by steady but cautious demand, where a persistent lack of new supply continues to limit product availability and constrain tenant options despite a user base that shows signs of wanting to grow. While local prospects for business are good, tenants seem to be keeping a wary eye on national economic trends.
Interest rates have increased borrowing costs, prompting tenants to delay expansions and relocations as they navigate tighter budgets. Decision making is further slowed by uncertainty surrounding potential tariffs and their possible effects on material costs that could ripple through supply chains.
High insurance premiums in a region affected by hurricanes force operators to reallocate funds from growth initiatives to coverage. Construction costs remain elevated; combined with a scarcity of viable development sites, speculative builds are extremely rare, which keeps inventory tight.
These headwinds, some of which should sound familiar in other markets around the country, have slowed deal velocity, though there are projects in the works that can build momentum in South Louisiana. The $1.8 billion Louisiana International Terminal (LIT) in St. Bernard Parish, a public-private partnership with Ports America and Terminal Investment Ltd., begins construction in late 2025 and phases in from 2028, aiming for 2 million TEUs (twenty-foot equivalent units) annually. This will eliminate air-draft restrictions, boosting container capacity and spurring adjacent warehousing demand, with projections of 18,000 new Louisiana jobs by 2050.
Propel Park, a $100 million development by Industrial Realty Group at the Michoud Assembly Facility in New Orleans East, marks the first new industrial build in two decades, offering over 1 million square feet in phases for manufacturing and distribution; Phase I’s 260,000-square-foot warehouse, anchored by Textron, is nearing completion, which is set by the end of the year.
Other initiatives include the $22 billion Venture Global Facility in Plaquemines Parish, operational since late 2024, and Gulfstream LNG’s 420-acre site for 4 million tons of annual production. Gulf South Commerce Park provides nearly 1,000 acres for logistics, with 189 acres in Phase I, while Luling Business Park completed a 125,000-square-foot facility early in 2025. These projects are expected to alleviate inventory shortages, attract high-value tenants and generate hundreds of jobs, fostering broader market growth.
The velocity of industrial investment sales reflects a cautious environment, with most transactions occurring offline through private negotiations rather than public listings. Buyers and sellers are prioritizing discretion amid valuation volatility. Transactions typically occur at cap rates of 7 to 8 percent, varying by lease term length and tenant credit profile.
Rental rates in the New Orleans industrial market have remained flat through the first nine months of 2025, hovering around $8.00 per square foot on a triple-net basis, which is effectively the same as 2024 as tenants remain cautious due to national economic factors. Escalating triple-net expenses are squeezing tenant budgets, with pass-through costs for property taxes, maintenance and especially insurance climbing in recent years.
All-in costs for tenants leasing space is approaching $12 to $13 per square foot in older builds and $14 to $16 for newer construction. Landlords would love to see local authorities gain success in curbing insurance premiums and property taxes, allowing more of the tenant’s budget to apply to base rent rather than expenses.
In summary, the greater New Orleans industrial market’s steady demand endures against recent barriers, with breakthrough projects offering glimmers of relief.
— By Matt Taylor, president, and Lee Audibert, broker at Property One Inc. This article was originally published in the October 2025 issue of Southeast Real Estate Business.