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SOUTHEAST SNAPSHOT, APRIL 2006
New Orleans Industrial Market
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James Barse,
SIOR, CCIM,
Broker Associate,
NAI/Latter & Blum
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As New Orleans continues its recovery efforts from Hurricane Katrina, parts of the city remain without electricity and other city services. Current population estimates for the city of New Orleans is 185,000, down from 460,000 pre-Katrina. The total MSA of New Orleans has dropped from 1.3 million in population to about 1,000,000 but has been inching up steadily during the past several months. Population levels of nearby St. Charles, St. John and St. Tammany parishes have slightly increased since the storm.
Amongst the grim news, the New Orleans’ industrial market has been a bright spot. The industrial market has tightened considerably and it is fielding development interest for smaller facilities ranging from 5,000 to 25,000 square feet. The Port of New Orleans suffered approximately $100 million in damage from the storm, so the majority of the future industrial activity will be considered reconstruction and repair rather than new development.
St. Charles Parish and the north shore of New Orleans have witnessed recent industrial development primarily due to the combined effects of an increasing population and commercial activity together with the availability of land. Most of the industrial facilities that escaped relatively unscathed from Hurricane Katrina, like Elmwood – New Orleans’ leading business and industrial park – have been leased. As would be predicted, restoration-related businesses and FEMA contractors, such as Belfor, Cotton Companies, CHM2Hill and Shaw Group, have absorbed much of the available industrial space. Also, utilities and communications companies have taken some large blocks of space. However, the majority of these leases are 1- to 3- year terms and questions remain as to what will happen with these tenants at the end of those terms.
The New Orleans metropolitan area contains approximately 55 million square feet of space. According to Latter & Blum’s quarterly industrial survey, only 3.51 million square feet of industrial space is available, the lowest inventory since December 2000, and close to 1 million square feet of that space is in some form of remediation or transition. Industrial vacancy rates are approximately 5 percent, down significantly from pre-Katrina levels of approximately 11 percent. Industrial rental rates range from $2.50 to $4.75 per square foot. The market should remain tight as the city continues to rebuild, a process that will take several years.
— James Barse, SIOR, CCIM, is a broker associate for NAI/Latter& Blum in New Orleans.
©2006 France Publications, Inc. Duplication
or reproduction of this article not permitted without authorization
from France Publications, Inc. For information on reprints
of this article contact Barbara
Sherer at (630) 554-6054.
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