SOUTHEAST SNAPSHOT, NOVEMBER 2008

Baton Rouge Retail Market

The task of providing a brief snapshot of the Baton Rouge retail market can be a quite challenging one. The local economy is not immune to the recent economic developments that have occurred in both the national and regional marketplaces, and the national housing downturn has resulted in a downturn in consumer confidence. Both factors have placed a significant strain on retailers, particularly home improvement and furnishing chains. The greater Baton Rouge is fortunate to have escaped the full brunt of this effect so far.

The greater Baton Rouge area has many bright spots and reasons to retain cautious optimism. The Jindal administration, in conjunction with the economic development secretary, has pursued an aggressive campaign to utilize the geographic location and natural resources of the state to attract new businesses. The corridor of interstates 10 and 12 has allowed the Baton Rouge retail market to remain steady for the time being. In many ways, though, the post-Katrina rush is finally conceding to a more realistic point in Baton Rouge.

According to Dottie Tarleton of Stirling Properties, average rents have increased $1.02 per square foot this year, from $14.25 per square foot in 2007 to $15.27 per square foot in 2008. Vacancy has only increased slightly in the 93 shopping centers surveyed in the area, up 0.87 percent from 2007. Lifestyle centers that customarily require much higher rental rates were omitted due to their potential to skew the figures.

The mixed-use lifestyle center, which makes shopping more of a destination, is an area trend, as evidenced by the continued growth of JTS Interests’ Perkins Rowe and its recent attraction of California Pizza Kitchen. Other notable chains are scheduled to join the tenant mix. The Boulevard, located at the Mall of Louisiana, has added BJ’s Restaurant & Brewhouse and Borders Books & Music. Dick’s Clothing and Sporting Goods is set to anchor a new power center just across the street.

Despite a market that may be nearing saturation, other notable projects are either ongoing or have recently commenced. Following the mixed-used lifestyle trend, Donnie Jarreau Real Estate continues its development of Perkins Palms, attracting the second PJ’s Coffee to the area. Baltimore-based MIE Properties is proceeding with Barringer Crossing II, comprised of a 60,000-square-foot retail expansion to its existing Barringer Foreman Technology Park in the heart of South Baton Rouge. According to Todd Pevey, vice president of leasing and operations at MIE, “We have experienced a strong interest and consistent activity at a time of economic uncertainty that would lend me optimism toward the Baton Rouge market.” Also worth noting is the recent redevelopment of Acadian Village Shopping Center by Corporate Properties Realty Trust.

Ascension Parish and Livingston Parish continue to vie for the top spot when considering retail submarkets of Baton Rouge. The city of Central is also experiencing growth, as Hibbett Sports has recently become the first of many high-profile tenants in a 20,000-square-foot center near the Super Wal-Mart. According to Charlie Colvin of Beau Box Commercial Real Estate, there continues to be strong activity in the immediate area surrounding Bass Pro Shops Outdoor World and its outparcels in the strip retail center. Hooters and LongHorn Steakhouse have been added to the mix. However, the much-anticipated groundbreaking of Livingston’s Juban Crossing by Creekstone Companies and Jim Wilson & Associates remains a question mark. Ascension remains strong in all areas of the parish, with several shopping centers in Prairieville being completed or in pre-leasing stages, such as the CVS/pharmacy-anchored center at U.S. Route 61 and LA 42. The LaFaye Shopping Center, Commerce Center, Manchac Marketplace, the CVS/pharmacy center and Galvez Commons are all either planned or are under construction.

The maverick attitude that pervaded the Baton Rouge retail development scene of 2007 has now given way to a bit of caution and uncertainty. Those engaged in the development and brokerage of retail properties in our area continue to push forward with perseverance. It is always a prudent idea to perform due diligence and analysis in order to shift focus to the site selection and tenant mix that will gain and retain strength in the market of today.

— Barret Brian Babin specializes in retail real estate for NAI Latter & Blum in Baton Rouge, Louisiana.

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