Growth in New Orleans' multifamily market has been modest in the last year with almost 100 percent of the developments targeting the higher end of the market, according to Larry Schedler, president of Larry G. Schedler & Associates. "As newer, more modern properties have emerged, more of a ¹lifestyle' renter has entered the market," he says. "These tenants now have product to consider in addition to single-family housing."

The barriers to entry in the metro New Orleans market are significant, according to Schedler. The market is virtually an island with the city situated between Lake Pontchartrain to the north, the Mississippi River to the south, and wetlands to the east and west. "The metro area is six to nine feet below sea level, and the limited land that does exist for development requires fill and pilings," he says. As a result, the ability to significantly increase the inventory of multifamily housing in Metro New Orleans will always be somewhat retrained.

The inventory in Metro New Orleans is performing well, however. The metro market has an inventory of approximately 50,000 units, and the majority of this inventory is 20 to 25 years old. "We have a supply that is meeting the demand, which is evidenced by the strong occupancy levels and the rental increases that owners are able to implement. With the barriers to entry and the improving economy, the metro New Orleans apartment market is well poised for the future," says Schedler.

Present trends in multifamily development in New Orleans are toward in-fill locations in the uptown/downtown sections of New Orleans, most of which are loft-style redevelopment deals utilizing Class C office buildings and turn-of-the-century industrial properties. Another trend is toward limited garden style apartment developments in suburban locations, primarily in East Jefferson/Kenner, as well as in east/west St. Tammany Parish. New construction is also being developed to serve the lifestyle renter.

According to Schedler, the projects currently under development are for the upper end of the market. The demand for affordable housing, he says, is being met by the rehabilitation of the existing inventory.

The majority of development in New Orleans is taking place as conversions in downtown/uptown in-fill locations. Development is also taking place both in east and west St. Tammany Parish due to the availability of land and income levels which support the rental rates necessary for new construction.

Significant developments in the New Orleans area include 180 units at Emerald Forest Apartments in Covington, 228 units at Botanica Apartments in Mandeville, 112 units at Mansions at Spartan Trace in Slidell, and 300 units at Pelican Pointe Apartments in Slidell as well. "These properties, which are located in St. Tammany Parish, are being developed in areas that have traditionally been ¹bedroom communities' to downtown New Orleans," says Schedler. "These areas have had limited multifamily development and are targeting higher income, lifestyle renters." The emergence of this inventory on the market will affect the smaller properties of less than 100 units in St. Tammany Parish, as well as single-family rentals in the submarket. Additionally, these developments are bringing in residents from other parts of the metro area who are attracted to the newer developments and the public school system of St. Tammany Parish.

Saulet Apartments is a new 703-unit development in an in-fill location in uptown New Orleans. "This property should have an affect on the single-family rental market that is typical of this historic area," says Schedler. Chateau Lake Apartments in Kenner will add a total of 480 units to the market. Phase I of this development began leasing 12 to 18 months ago. Phase II is currently under construction. "This development will help satisfy the demand for units in the City of Kenner, which prior to this development, has had a moratorium on multifamily projects," says Schedler.

Developers new to the New Orleans market include Greystar Development of Texas, which is developing the 703-unit Saulet Apartments in uptown New Orleans on an in-fill site in a former industrial neighborhood. The Bryan Companies of Jackson, Mississippi, recently completed construction on the 300-unit Pelican Pointe Apartments in Slidell.

Rental rates in New Orleans range from $.85 to $1.25 per square foot for new construction; $.85 to $1 per square foot for Class A; $.73 to $.86 per square foot for Class B; and $.64 to $.71 per square foot for Class C. Overall, occupancy rates are at 95 to 96 percent. In downtown/uptown, they are at 97 to 98 percent. In East New Orleans, they average 95 to 96 percent. In Westbank, they are at 95 percent. In Metairie/East Jefferson, they are at 97 to 98 percent.

Submarkets to keep an eye on in the near future are Hammond, St. Charles Parish and St. Tammany Parish. Hammond is located approximately 50 miles north of New Orleans and is made up primarily of smaller properties of less than 100 units. Additionally, it is the home of Southeastern Louisiana University, which is the only state university in the area with an open admission policy. The enrollment has increased as LSU in Baton Rouge has tightened their admission policies.

The westbank of St. Charles Parish has a tremendous amount of available land that is free of wetlands issues. Additionally, the Interstate 310 interchange has provided the transportation infrastructure to support a great deal of development. The area is also located in a corridor of power plants, refineries and chemical companies and has a fairly significant transient population with virtually no multi-family housing.

Future development in western St. Tammany Parish, according to Schedler, would be limited due to community resistance. "However, I would expect further development in eastern St. Tammany Parish (Slidell), which enjoys a location between two space centers, the City of New Orleans and the gambling developments on the Mississippi Gulf Coast."

In the future, Schedler predicts that growth will be limited and controlled, due to scarcity of available land. "I would anticipate a continued effort to develop in-fill locations as well as garden communities in the suburbs."

Larry G. Schedler, CCIM, is president of Larry G. Schedler & Associates.


©2001 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.