SOUTHEAST SNAPSHOT, OCTOBER 2008

New Orleans Multifamily Market

Although it has been a little more than three years since Hurricane Katrina hit and a little more than a month since the threat of Hurricane Gustov, the metro New Orleans apartment market has seen a decade of strides in the new development and re-development of our multifamily market. Activity in the five-parish area that makes up the majority of our apartment market has been focused on the gut rehab of approximately 6,000 units and an unprecedented wave of new construction. New Orleans currently has an inventory of approximately 40,000 units.

The majority of new developments in the market are largely the result of incentives the federal government provided in the aftermath of Hurricane Katrina. These GoZone benefits provided additional allocations of Low Income Housing Tax Credits and increased tax-exempt bond allocations. One of the most significant trends is the redevelopment of the Tulane Avenue corridor in Central City. This was a deteriorating submarket until developers began redeveloping the area with mid-rise, mixed-income communities. The Domain Companies of New York is underway with the 183-unit Preserve and the 226-unit Crescent Club. The Volunteers of America are developing the Terraces on Tulane, which will consist of 200 affordable housing units specifically for seniors. Many properties are in the planning stages in Central City, and we should see continued interest in this once forgotten corridor.

The other sector of the metro area that developers have taken note of is north of Lake Pontchartrain in St. Tammany Parish. This submarket has the highest per-capita income in the state. The newest development is the 288-unit, market-rate Chenier Apartments, developed by the Park Companies of Metairie, Louisiana. The desirability of this area should provide an excellent tenant base for multifamily developers and investors. In Slidell, in eastern St. Tammany Parish, Norfolk Pointe is developing Lakeside Apartments, which consist of 250 mixed-income units, and Herman & Kittle of Indianapolis is developing the Canterbury House, which consists of 300 units.

The Historic Center of New Orleans, which includes the CBD, Garden District and Mid-City, has a host of developments underway, including the Krauss Apartments, which is the conversion of an old department store into 119 high-end units. The property is being developed by the KFK group of New Orleans, utilizing historic tax credits. Other CBD developments include 200 Carondelet, a 190-unit mixed-income, high-rise community being developed by Reliance/Carondelet Associates. HRI of New Orleans is developing 310 mixed-income units in River Gardens, and Brian Gibbs Development of New Orleans is underway with the 930 Poydras Apartments. Also under construction by The Wiznia Companies is a multitude of CBD developments including Saratoga Lofts, the Maritime Building and Stephens Garage.

The segment of the market that will continue to require inventory is that of the affordable housing market, particularly workforce housing. New Orleans has a service- and tourism-based economy, and the need for clean, safe, affordable housing is paramount for the growth of our population and economy. Suburban market rate activity will continue to be focused on St. Tammany Parish in Mandeville, Covington, Slidell and along the Interstate 12 corridor.

Overall metro New Orleans occupancy is in the 94 to 95 percent range, with the highest reported occupancy of 96 percent in the New Orleans Historic Center and in St. Tammany Parish. Rental rates range from a low in the $700 range to a high of more than $2,100 a month, approximately $1 a square foot. The highest rents reported are in the New Orleans Historic Center and in St. Tammany Parish.

Metro New Orleans is a resilient market that has emerged from tumultuous times. The market is revitalized and stable and is one that should continue to evolve and attract investors.

— Larry Schedler is a principal with New Orleans-based Larry G. Schedler & Associates.

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