Escolar Documentos
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industrial Trends
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finance Trends
Brian S. Andrews 54
Andrews Commercial Real Estate Services
residential Trends
CHAIRMAN Trends
88
Copyrighted 2013 Commercial Investment Division of the Greater Baton Rouge Association of REALTORS. No part may be reproduced or retransmitted without the express written permission of the Commercial Investment Division of the Greater Baton Rouge Association of REALTORS . All opinions expressed herein are those of the writers and should not be relied upon without consultation with your own investment advisor, attorney, accountant or tax advisor. LREC Vendor #134
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office Trends
EXECUTIVE OVERVIEW
Landlords have reported that more Tenants are renewing rather than
The Baton Rouge office market continued to show slow improvement throughout 2012. downsizing or vacating and there has been a slow trickle of new tenants entering the market and some local expansion. While there is mixed reaction on the overall health of the market, most agree that it has at least stabilized or slightly improved. Transactions are moving at a steadier pace with companies feeling more confidence in the economy. Tenants still perceive it to be a favorable market and continue to seek aggressive rental rates, large concessions, free rent, flexible lease term, and abundant tenant improvement allowances; especially those with a national or international reach. However, most local landlords have been able to keep the concessions under reasonable control. Those who did get aggressive to lease vacant space mainly chose to lower rental rates or increase TI allowances slightly to sign tenants. Demand is becoming stronger for buildings with efficient space. More owners and tenants are focusing on energy efficiency, green initiatives, paperless environments, open/flexible floor plans, and cubicles to create lower occupancy costs. Older buildings that are functionally obsolete are being overlooked by tenants and may require some renovation to attract tenants. Sales activity is also on the rise as owner occupant transactions picked up substantially in 2012. The investment market is still slow, especially with speculative markets, but as occupancy continues to rise it should improve. New construction has been limited mainly due to difficult financing requirements and construction costs. Overall, activity has continued to increase in early 2013, and early indications are again pointing towards a slowly improving market. seen prior to hurricane Katrina. Occupancy levels have continuously risen for the past three years and we are now back to traditional levels
Office Trends
Staying Strong... Building Stronger!
Baton Rouge Office Market Occupancy
100 OCCUPANCY %
2013 OFFICE TRENDS COMMITTEE BRANON W. PESNELL CCIM, SIOR Speaker, Trends Beau Box Commercial Real Estate Jonann Stutzman JTS Management Company gary black Wampold Companies DREW PEARSON, CCIM Waters & Pettit Commercial Real Estate Joey Canella Beau Box Commercial Real Estate
95
90 85 80 75 2004 2005 87.29 85.4
96.27
2007
2008 YEAR
2009
2010
2011
2012
2013
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laden, with most deals not affected rates or demand for being landlord decided direct space.on rent and tenant improvement allowance. Local landlords have been reluctant to give in to the Occupancy rates in Baton Rouge increased to 86.44% up from 82.99% in 2012 and pressure 82.83% in and have mainly negotiated deals with slight rental rate reductions off the asking
A few notable transactions have changed the office landscape over the past year. It was rates. Additionally, with most landlords being cash poor, tenant improvement into multi-family. The adjacent Capitalnorms. One building is under contract for the same purpose allowances remained nearformer historical announced in late 2012 that the Commerce Building downtown was purchased to be redeveloped after Capital One relocated into One American Place in late 2012. Additionally, the sale of 1771 Lobdell Avenue to a church/non-profit group has taken this building out of use. All of these buildings activity were deleted from the survey thisprevalent year. Leasing has been most in requests for space of 10,000 The current State Farm Operations Center located at Towne Center will be vacant late this year as State square feet or less, with a few larger transactions. The amount of sublease in location, condition of market the space, is and quality of the building sure affected to produce strong the Baton Rouge negligible and hasisnot rates interest. or demand Farm has plans to relocate. This will create a 66,000 square foot vacancy in the market. However, the 2011. Average rental rates for both Class A and Class B properties basically remained flat.
for landlord direct space. Occupancy rates in Baton Rouge increased to 86.44% up from 82.99% in 2012 and 82.83% in 2011. Average rental rates for both Class A and Class B properties basically remained flat.
At Beau Box Real Estate, success stems from partnerships built on trust and value. Clients from across the country rely on our team for in-depth knowledge of local, regional, and national markets. Our top priority is a constant and consistent commitment to you; we always have your best interests in mind.
Office Trends
Staying Strong... Building Stronger!
Office leasing activity (continued)
A few notable transactions have changed the office landscape over the past year. It was announced in late 2012 that the Commerce Building downtown was purchased to be redeveloped into multi-family. The adjacent former Capital One building is under contract for the same purpose after Capital One relocated into One American Place in late 2012. Additionally, the sale of 1771 Lobdell Avenue to a church/non-profit group has taken this building out of use. All of these buildings were deleted from the survey this year. The current State Farm Operations Center located at Towne Center will be vacant late this year as State Farm has plans to relocate. This will create a 66,000 square foot vacancy in the market. However, the location, condition of the space, and quality of the building is sure to produce strong interest.
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Office Trends
$25.00 $20.00 PRICE PER SF $15.00 $10.00 $5.00 $2009 2010 2011 2012 2013 Acadian/ College $22.71 $22.14 $21.06 $21.19 $21.83 Sherwood Forest $19.58 $18.65 $18.50 $18.50 $18.65 Essen/ Bluebonnet $18.52 $21.58 $20.21 $20.04 $19.96
Sales activity in the office toadvantage be slow 2012 as However, some owner sector occupantscontinued were able to take of in historically lowfinancing interest rates concerns
and find exceptional Garden office pricing was able down slightly over the high per square lingered. However, somedeals. owner occupants were to take advantage of historically
foot pricing seen in 2007-2008, as values were driven down by lower demand and lower rental which has allowed more deals to transact and indicating that sellers have begun to accept that arms length transactions will continue to slowly improve this year. rates. Buyer andfind seller exceptional value expectations have become more office in-line than in recent years, low interest rates and deals. Garden pricing was down slightly
Sales activity in the office sector continued to be slow in 2012 as financing concerns lingered.
over the high per square foottheir pricing seen in 2007-2008, as values down values have declined from high levels in 2007. It is anticipated that sales were activity driven for by lower demand and lower rental rates. Buyer and seller value expectations have
While there were a few more distressed sales in 2012, bank owned property sales seem to be become more in-line than in recent years, which has allowed more deals to transact leveling off as the market and economy improve. There continues to be a lack of affordable or stable investment properties onbegun the market and investors are only seeking high return or value and indicating that sellers have to accept that values have declined from their add deals. Quality office related investment deals continue to be harder to come by due to
high levels in 2007. It is anticipated that sales activity tougher lending requirements and demand for higher cap rates. for arms length transactions will continue slowly improve this over year. Newto development has been sluggish the past few years with the difficulty in financing While
speculative investment product. However, this trend should improve as the leasing market continues to strengthen and less existing space is available. Since the majority of companies prefer to lease due to more the flexibility it offers, developers good bank credit and cash willproperty be able there were a few distressed sales inwith 2012, owned to find financing, especially for those with some pre-leasing.
sales
seem to be leveling off as the market and economy improve. There continues to be a lack of affordable or stable investment properties on the market and investors are only seeking high return or value add deals. Quality office related investment deals continue to be harder to come by due to tougher lending requirements and demand for higher cap rates. New development has been sluggish over the past few years with the difficulty in financing speculative investment product. However, this trend should improve as the leasing market continues to strengthen and less existing space is available. Since the majority of companies prefer to lease due to the flexibility it offers, developers with good credit and cash will be able to find financing, especially for those with some pre-leasing.
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Exceptional Office and Flex Space Baton Rouge Industriplex Business Park
Baton Rouge Industriplex Business Park
danP@sealynet.com
SEALY & COMPANY, INC. 150 James Drive East, Suite 140 150 James Drive East, Suite 140 St. Rose, Louisiana 70087 BR: 225.767.4776 NO: 504.463.5600 St. Rose, Louisiana 70087 FAX: 504.463.5650 BR: 225.767.4776 NO: 504.463.5600 www.sealynet.com FAX: 504.463.5650
www.sealynet.com
jenniferL@sealynet.com
Office Trends
Class B office average rental rate per SF 2009-2013
$18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $2009 2010 2011 2012 2013 PRICE PER SF
forecast
Forecast The Baton Rouge office market is expected to continue to slowly improve throughout 2013. Activity first quarter of the year has been strong. Positive the petro-chemical 2013.in the Activity in the first quarter of the year hasreports beenfrom strong. Positive reports and construction sectors should continue to fuel demand. However, the implementation of health care and the tax legislation at the national level will affectsectors our city and state.continue We expect to thefuel majority from petro-chemical and construction should demand. of activity to come from expansions and relocations from within our market, but state privatization and competition for implementation petro-chemical related maycare continue to tax bring new companies to Baton However, the of work health and legislation at the national Rouge. As the petro-chemical industry continues to turn around, look for growth from engineering construction firms. mentioned last year, if majority drilling activity in the Tuscaloosa level willand affect our city and As state. We expect the of activity to come from Shale proves positive, we could see overflow from ancillary business in the office sector.
The Baton Rouge office market is expected to continue to slowly improve throughout
expansions and relocations from within our market, but state privatization and competition for petro-chemical related work may continue to bring new companies to Baton Rouge. As the petro-chemical industry continues to turn around, look for growth from engineering and construction firms. As mentioned last year, if drilling activity in the Tuscaloosa Shale proves positive, we could see overflow from ancillary business in the office sector.
8 2
David Trusty
810-9926 datrusty@cox.net
Betty Phelps
241-2549 bprealtor@aol.com
Broker/Owner
David McKey
241-2548 David.mckey@coldwellbanker.com
Broker/Owner
938-6154
Average rental rates and occupancy rates for the individual buildings and submarkets surveyed are shown on the following spreadsheets.
Julia Kennedy 485-4330 j44kennedy@gmail.com Baton Rouge Office Market
%OXHERQQHW%OYG%DWRQ5RXJH/$ )D[
www.gullyphelpsmckey.com
March 2013
Class A
Class B
3 9
Office Trends
SUMMARY OF OFFICE MARKET BY AREA
For Class A Buildings Sunday, March 03, 2013
OCCUPANCY 6 MONTHS OCCUPIED RATE SUBLEASE FEET RATE PENDING Acadian Centre A 75,000 69,935 93.25% $19.00 0 0 The Bank 2010 to @2011 real estate market was essentially flat but showed CitiPlace Centre I (Hancock Building CitiPlace)industrial A 82,000 77,374 94.36% $22.00 0 0 CitiPlace Centre II A 32,000 32,000 100.00% $20.00 0 0 CitiPlace Centre III (The Bancorp Bank Center @ the CitiPlace) A is strengthening. 43,000 38,678 While 89.95% $23.00 high, 0 the 2011 0 year indications that industry considered Acadia Trace A 121,000 121,000 100.00% $20.00 0 0 Corporate Atrium A 76,400 57,331 75.04% $18.00 0 0 end inventory vacancy rate stood as compared to 15.03% at year Corporate Center A 48,000at 14.36% 48,000 100.00% $22.00 0 0 end Republic Finance A 27,000 17,200 63.70% $27.50 0 0 2370 Towne Centre A 66,000 66,000 conditions 100.00% $25.00 0 66,000 2010. An encouraging indicator of improving was the positive absorption BUILDING CLASS
office Trends
1 2 3 4 5 6 7 8 9
TOTAL
570,400
527,518
92.48%
$21.83
66,000
1 2 3 4 5 6
of smaller industrial buildings (5,000 sq. ft. to 10,000 sq. ft.) increased. Heavy industry, meaning petro-chemical industry, will continue to lead this area out of a recessionary ESSEN/BLUEBONNET
CM
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
SQUARE OCCUPANCY 6 MONTHS OCCUPIED RATE SUBLEASE The industry is back in a growth mode, aided in PENDING part by FEET RATE Essen Center A 113,000 30,000 26.55% $20.00 0 0 United Plaza IV A and 71,547 71,547 100.00% $20.00 0 State economic incentives lower stabilized natural gas prices -0 which helping Jefferson Brentwood A 63,625 63,625 100.00% $21.00 0 0 One United Plaza A 94,204 94,204 100.00% $20.00 0 0 area plants effectively and restart shut down until Two United Plaza operate more cost A 197,010 190,114 96.50% $20.00 units. 0 However, 3,500 United Plaza III A 60,389 40,389 66.88% $19.50 0 12,000 United Plaza A 97,000 businesses 97,000 100.00% $19.50 0 to enter 0 into there is IXsustained economic growth, will remain reluctant United Plaza XII A 154,000 149,630 97.16% $20.00 0 0 United Plaza V A 58,365 58,365 100.00% $22.00 0 0 long term expect to continue predicting United Plaza VIII leases. Landlords A can 57,932 53,145 91.74% $18.00 rent concessions 0 0 from United Plaza VII A 58,000 58,000 100.00% N/A 0 0 Bluebonnet Centre tenants and on A renewals 71,656 of existing 66,510 92.82% for$19.50 0 0 sales prospective tenants the short term. Land Louisiana School Employee Retirement A 112,253 112,253 100.00% N/A 0 0 Jacobs Plaza A 192,600 192,600 100.00% N/A 0 0 were essentially non-existent. Still a disconnect between N/A perceived Shaw A 240,000 240,000 100.00% 0 market 0value Perkins Rowe A 126,328 107,453 85.06% $20.00 0 0 BUILDING market. CLASS petro-chemical
MY
CY
CMY
of TOTAL property values by some sellers versus actual91.91% market $19.96 demand. Some sellers 1,767,909 1,624,835 0 15,500still
BUILDING CLASS SQUARE OCCUPIED OCCUPANCY RATE SUBLEASE 0 0 were 0 0 6 MONTHS 0 1,406 60%. 0 1,406
SHERWOOD FOREST holding on to post Hurricane Katrina property values despite significant increase in
1 2 3 4000 S. Sherwood Office Building Court Plaza new construction CDI Center TOTAL FEET RATE Parish permit dollar values PENDINGfor vacancies since Hurricane Katrina. East Baton Rouge A A down A 75,482 70,382 93.24% 66,000 47,530 72.02% 22% but additions and 105,720 58,840 55.66% 247,202 176,752 71.50% $19.50 $17.95 expansions $18.50 $18.65
was
up
No
significant change in land or lease rates during 2011. Oil and natural gas exploration
# of Buildings 8 6 16 3 33
has been increasing around theSQUARE State. Local pipe and valve as well as other related OCCUPANCY 6 MONTHS
AREA CLASS A A A ACADIAN/COLLEGE service industries DOWNTOWN ESSEN/BLUEBONNET SHERWOOD FOREST TOTAL A an 570,400 527,518 $21.83 0 66,000 should see increased benefit 92.48% from oil and gas exploration. 1,371,477 1,767,909 247,202 1,189,624 1,624,835 176,752 86.74% 91.91% 71.50% 88.92% $21.75 $19.96 $18.65 $20.55 23,742 0 0 0 15,500 1,406 FEET OCCUPIED RATE RATE SUBLEASE PENDING
TOTAL
3,956,988
3,518,729
23,742
82,906
10 2
CM
MY
CY
MY
Office Trends
SUMMARY OF OFFICE MARKET BY AREA
For Class B Buildings Sunday, March 03, 2013 ACADIAN/COLLEGE
1 2
CLASS B B
SUBLEASE 0 0 0
6 MONTHS PENDING 0 0 0
DOWNTOWN BUILDING Renaissance East Renaissance West Gras Town Plaza Roumain Building State National Taylor Building 339 Florida 525 Florida St. (Kinko's Building) Cordova Square 500 Laurel Street TOTAL CLASS B B B B B B B B B B SQUARE FEET 172,000 50,000 30,000 32,997 71,912 30,000 44,524 30,000 20,000 28,000 509,433 FLORIDA/AIRLINE BUILDING Alpha Building (8281 Goodwood) Dean Tower (5700 Florida) Mid City Plaza (4962 Florida) Direct General - 10255 Florida 1900 Lobdell Bon Carre TOTAL CLASS B B B B B B SQUARE FEET 30,209 79,491 31,975 90,898 53,000 712,920 998,493 SHERWOOD FOREST BUILDING IBM CJ Brown Plaza Sherwood II Sherwood Oaks Office Park Sherwood Plaza Business Park 10719 Airline Bellsouth Building Security National Sherwood Tower TOTAL CLASS B B B B B B B B B SQUARE FEET 51,878 36,000 25,673 103,000 61,000 37,500 122,849 45,378 77,702 560,980 ESSEN/BLUEBONNET BUILDING 7414 Perkins Road Essen Crossing TOTAL CLASS B B SQUARE FEET 72,145 52,669 124,814 TOTAL
# of Buildings 2 10 6 9 2 29
1 2 3 4 5 6 7 8 9 10
OCCUPIED 172,000 50,000 28,500 32,997 56,912 30,000 44,524 30,000 20,000 17,000 481,933
OCCUPANCY RATE 100.00% 100.00% 95.00% 100.00% 79.14% 100.00% 100.00% 100.00% 100.00% 60.71% 94.60%
RATE N/A $13.00 $15.00 $16.00 $11.00 $15.50 $16.00 $17.00 $20.00 $17.00 $15.61
SUBLEASE 0 0 0 0 0 0 0 0 0 0 0
6 MONTHS PENDING 0 0 0 0 0 0 0 0 0 0 0
1 2 3 4 5 6
SUBLEASE 0 0 0 0 0 0 0
6 MONTHS PENDING 0 0 0 0 0 0 0
1 2 3 4 5 6 7 8 9
OCCUPIED 43,636 31,857 18,000 90,327 37,167 37,500 113,095 45,378 59,632 476,592
OCCUPANCY RATE 84.11% 100.00% 70.11% 87.70% 60.93% 100.00% 92.06% 100.00% 76.74% 84.96%
RATE $18.50 $16.00 $15.00 $15.00 $14.00 $17.50 $15.00 $14.50 $15.50 $15.67
SUBLEASE 0 0 0 0 0 0 0 0 0 0
1 2
SUBLEASE 0 0 0
6 MONTHS PENDING 0 0 0
CLASS B B B B B
SUBLEASE 0 0 0 0 0 0
12 2
Occupancy Trend
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INDUSTRIAL Trends
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EXECUTIVE SUMMARY
The demand for industrial real estate strengthened throughout 2012, and the trend should continue into 2013. By the end of 2012, the inventory vacancy rate stood at approximately 11.60% as compared to 14.36% at yearend 2011. This is an important note, as this reflects the third consecutive year that available industrial space has declined. The last recorded vacancy rate of 11% was in 2004, a marketplace considered stable and not stimulated by the abnormal impact on demand for space resulting from Hurricane Katrina (20052006). By comparison, the national industrial vacancy rate yearend was near 10% and dropping into 2013. Absorption, the net change in occupied inventory from one year to the next, rounded out at 868,000 square feet, nearly quadrupling the net absorption of 220,945 square feet in 2011. While a statistically significant event, this number should be noted with some degree of caution, as large blocks of space in bulk storage facilities were absorbed with relatively short-term leases in place. The leading factor for absorption was the sale or lease of bulk warehouse distribution space to logistic companies that facilitate the packaging and shipment of plastic and chemical products manufactured from local chemical and petroleum producers. Additionally, as the economy strengthened, so did small businesses which absorbed smaller industrial buildings (5,000 to 10,000 square feet). The abundance of low cost natural gas used as a feed stock to the petro-chemical manufacturers has been the number one reason for a rebound in the greater Baton Rouge industrial real estate market, a trend carried over from the previous year. This is particularly evident in East Baton Rouge, Ascension, and West Baton Rouge
INDUSTRIAL Trends
Staying Strong... Building Stronger! Stronger
2013 INDUSTRIAL TRENDS COMMITTEE Parishes due to their areas proximity to the plants, and better/closer access to the interstate-highway systems, skilled labor and the availability of rail. Existing service companies operating in this field, such as industrial cleaning, supply stores, and engineered product service centers are expanding facilities; and newcomers are entering the market and opening regional office-warehouses from out of state. The merger of companies and the consolidation of service centers with multiple locations under the one roof concept is a continuing trend. TODD PEVEY, MPA MIE Properties Co-Chairman Scot Guidry, CCIM Speaker, Trends Mike Falgoust & Associates Commercial Real Estate Co-Chairman Marc Barker CCIM, SIOR NAI Latter & Blum Brent Garrett CCIM, SIOR Beau Box Commercial Real Estate Ryan Greene Maestri Murrel Real Estate Walt Ketchings NAI Latter & Blum Mathew Laborde Beau Box Commercial Real Estate David Lakvold, MAI The Lakvold Group
Demand for space from companies operating in the consumer goods and business service sectors have improved, but vary according to products. As the heavy industrial segment of the industry expands and adds jobs, and US factory orders go up, so will consumer demand for housing, office, and retail. This directly affects the demand for office-warehouse space of every size, but especially the space needed less than 20,000 square feet.
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The Tuscaloosa Shale play for oil exploration has not developed as rapidly as expected; and therefore did not have an impact on demand for industrial space, which would have benefited East Feliciana, West Feliciana, and St. Helena Parishes.
Land is again beginning to trade for both the large petro-chemical operators, investors with build to suit projects and speculative purchases, and companies that are either moving from a lease interest to ownership or expanding. This interest has occurred more frequently in Ascension Parish and parts of East Baton Rouge Parish.
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INDUSTRIAL Trends
Staying Strong... Building Stronger! Stronger
INDUSTRIAL INVENTORY HISTORY INDUSTRIAL INVENTORy history
MEMO 2004 2005 KATRINA IMPACT 2006 KATRINA IMPACT 2007 2008 ECON RECESSION 2009 ECON RECESSION 2010 ECON RECESSION 2011 ECON RECESSION 2012 % INVENTORY VACANT 11.04% 6.48% 4.74% 8.66% 13.78% 14.13% 15.03% 14.36% 11.60% NET ABSORPTION (NET CHANGE IN INVENTORY) 496,335 S.F. 2,162,949 S.F. 1,381,015 S.F. 386,483 S.F. (100,616) S.F. 102,359 S.F. (62,748) S.F. 220,945 S.F. 867,959 S.F.
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BOSS
GOOD DESIGN IS GOOD BUSINESS
solutions, llc
22526 64 564 j il lbos s@ e ate l. n e t
INDUSTRIAL Trends
HISTORICAL VACANCY AND ABSORPTION
4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 (500,000) (1,000,000)
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
15.03%
14.36%
14.00%
12.00% 10.08%
11.04%
11.60%
10.00% 8.10%
8.66%
8.00%
2.00%
0.00%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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We leverage our experience and relationships to bring maximum benefit to your real estate transactions. Sealy brokers, who hold significant experience in industrial, office, retail, and land, provide superior service and deliver results.
INDUSTRIAL Trends
INDUSTRIAL INVENTORY STATISTICS
INDUSTRIAL Trends
Staying Strong... Building Stronger! Stronger
NOTICEABLE TRENDS
3.00% reduction in vacancy during 2012. 14.36% Vacancy in 2011compared to 11.60% vacancy in 2012 on 5,000 square feet and larger buildings. National market average less at approximately 10% and dropping. US Factory orders go up which impacts the demand for the raw products Louisiana produces to make these goods. Increasing demand in general within the industrial market. Increasing demand for land situated along the Mississippi River that includes access to feedstock pipelines or ready access to feedstock from neighboring plants, and/or rail. Increased demand for bulk oil storage. Approximately 325,000 square feet of additional bulk warehouse space leased in 2012 compared to 2011 at the Port of Greater Baton Rouge, Baton Rouge West, and Graham Packaging in Westport. Increased rental rates for smaller office-warehouses (15,000 square feet and less) in Ascension Parish and parts of East Baton Rouge Parish. Rates stagnant but vacancy remaining steady in older industrial parks and properties in North Baton Rouge. Landlord concessions continuing for these properties. 868,000 square feet positive absorption in 2012 vs. 221,000 square feet in 2011. Natural gas prices lower/stabilized and supplies abundant. Improving lending environment, especially for owner occupants. Oil and gas interest remains vibrant. No significant change
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INDUSTRIAL Trends
EAST BATON ROUGE PARISH BUILDING PERMITS EAST BATON ROUGE PARISH BUILDING PERMITS
YEAR EBR PERMITS (NUMBER) EBR PERMIT ($) SEE NOTE 1 EBR PERMIT FEES ($) 2010 22,565 $710,536,043 SEE NOTE 2 $4,878,466 2011 21,759 $729,876,485 SEE NOTE 3 $4,878,466 2012 21,698 $603,507,068 $5,028,836
East Baton Rouge Building Permits includes all residential and commercial permits including schools, churches, hospitals, office buildings, and industrial buildings.
2012 INDUSTRIAL LEASE RATES Sample Lease Data Table Product Type Flex Space Office Warehouse Older Office Warehouse New Bulk Warehouse Older Bulk Warehouse New Size (Sq. Ft.) 1,000 15,000 5,000 15,000 5,000 15,000 20,000+ 20,000+
Lease rates and terms improving in areas nearest announced projects and plant expansions. No increases in older industrial and heavy commercial parks where concessions and short term leases continue.
22
industrial
office
r e ta i l
land
Gil Guidry
Knowledge
TRUST
Grey Hammett, III
ReSUlTS
Chris Pike
225-778-5858
www.mfacre.com
INDUSTRIAL Trends
2012 NOTEWORTHY MAJOR PROJECTS
Estimated/Rounded
CF Industries, $2.1 billion expansion of its ammonia and urea Donaldsonville plant largest project in parish history;
Methanex Corporations relocation of its methanol manufacturing plant from Chile to Geismar, $550 million creating 130 jobs, 2nd plant pending; Avalon Rare Metals; $350 million start up manufacturing facility creating 175 jobs; Genesis Energy announcement of a $125 million 18 mile crude oil pipeline connecting to ExxonMobil Baton Rouge;
ExxonMobil expanding lubricant plants in Baton Rouge & Port Allen, $215 million and adding 45 jobs; Shintech Louisiana expanding hydroxyethyl ceollulose plant in Plaquemine, $120 million adding 30 jobs; Petroplex, St James plans for a $600 million oil storage terminal; Expansion at BASF valued over $138 million; Expansion at Westlake Vinyls, $467 million adding 60 jobs; Expansion at Aegis Flow Technologies, Geismar, $2 million; The $10 million plus consolidation and expansion of Emerson Process to Edenbourne development; Union Pacific Railroad announced major rail upgrades in south Louisiana and new rail car storage yard in St. James Parish New methanol plant announced St. James Parish; Nucor Steel plant site and dock construction well under way; Louisiana Scrap completed new facility on Intracoastal Canal in West Baton Rouge; Louis Dreyfus well under way on new dock and upgraded grain facilities at Port of Greater Baton Rouge.
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INDUSTRIAL Trends
Staying Strong... Building Stronger! Stronger
2013 forecast
The industrial market should continue to show improved absorption rates and declining vacancies. Expect vacancy rates to be between 9% and 10% by yearend 2013. The largescale industrial projects started, not including the announced projects underway, are investments well into the billions of dollars. Some speculative small scale building is beginning and will continue to occur to satisfy the pent-up demand that is now moving forward after years of deliberation, especially in the southeast areas of East Baton Rouge Parish and Ascension Parish. Suitable land, zoning and the associated development costs will temper this somewhat. The announcement of Katoen Naties construction of 2,000,000 square feet bulk warehouse in Baton Rouge (first phase 600,000 square feet) may have an effect on existing numerous small warehouses servicing the plastic and chemical industries where short term leasing are in place. Landlords holding these properties may need to source other long term industries requiring storage and distribution. Therefore, the committee cautions against large scale development for bulk storage and distribution facilities. National service companies, both industrial and heavy commercial, will continue to seek locations for consolidation of multiple facilities. Rents should improve modestly in the growth areas; however, older facilities will remain locked in at the same rates or possibly even decrease.
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25
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multi-family Trends
26
multi-family Trends
Staying Strong... Building Stronger! Stronger
A bulleted summary of our key considerations & expectations is provided: The diminished availability of mortgage financing for home purchases 2013 MULTI-FAMILY TRENDS COMMITTEE D. Wesley Moore, II MIA, CCIM Speaker, Trends Cook, Moore & Associates SEAN MCDONALD, MAI Cook, Moore & Associates craig davenport Cook, Moore & Associates Abby MCMASTERS Cook, Moore & Associates appears to have substantially slowed the transition of renters to home ownership, resulting in greater tenant retention. Tenants lacking a strong credit rating, income history and/or assets for down payment now have much greater difficulty in securing mortgage financing and graduating to home ownership. This appears to have a been a catalyst for absorption of the incoming units over the past 5+ years. The supply of rental units in the Baton Rouge MSA has increased substantially
(5,682 new apartment units were completed from when Katrina hit on August 29, 2005 through the end of 2011, 632 units were built in 2012, 781 units are under construction, and 1,281 units are proposed for construction in 201314). The total new rental supply for 2006-14 could exceed 8,300 units, which would equate to roughly 930 units per year over a 9-year span (if all of the planned units are completed by the end of 2014). Market-wide vacancies have returned to a level of roughly 5.5%, with rental increases in 2012 consistent with historical norms (average rentals rose to $0.93/square foot, reflecting 2% growth). Economic rents and occupancies (net of concessions, typically in the form of waived rentals, or free appliances) have moderated in many market segments, as competitive pressures to lease the remaining inventory of new/ vacant units appear to still be having an effect. Net absorptions for the new complexes, per discussions with owners and managers, have predominantly hovered in the range of 10 to 30 units per month. The historical norm for new complexes locally has been 12 to 20 units per month.
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ALEXIS MARTIN Cook, Moore & Associates ELISE MOORE Cook, Moore & Associates LAURA WHITE Latter & Blum Property Ty Gose, CCIM Latter & Blum Property GREG CORDARO Cordaro Companies DAVID TREPPENDAHL, CCIM Cook, Moore & Associates
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multi-family Trends
Consideration should also be given to the 1,954 for sale condo units built in the Baton Rouge MSA during 2006-10. These have historically drawn primarily on the segment of the market oriented toward owner-occupancy, but many have been acquired by investors, or have been converted back to rental units by the original developers (who have had difficulty attracting purchasers capable of securing mortgage financing since 2008) and represent competition for traditional rental units. Absorption of these units by investors has diminished greatly, as financing for these acquisitions has become extremely difficult to secure. Virtually all proposed condo projects have been put on hold (except for a few, small, student-oriented projects near LSU).
The basic mechanics of housing demand are as follows: the national and local
norm has historically been roughly 2.75 people per household, so, for each 1,000 people that have remained long-term in Baton Rouge as a direct result of Katrina, we should need to have roughly 360 additional housing units to satisfy the incremental demand created by such a population increase. As roughly 33% of the local units have historically been renter-occupied, roughly 120 of these 360 units (per thousand residents) need to be rental units. As the Baton Rouge areas long-term population increased by roughly 30,000 directly due to Katrina (as well as the normal population growth we would normally have generated), the local market should have been able to absorb roughly 3,600 new rental apartment units to satisfy the incremental longterm demand stirred by Katrina without producing materially adverse impact on the existing rental housing stock. While the Post-Katrina additions to the supply of rental units has exceeded this mark, the single-family residential mortgage market wild card appears to have come into play (as the adverse impact on market occupancies such an oversupplied state should produce has not been noted).
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multi-family Trends
Staying Strong... Building Stronger! Stronger
A key impetus for the substantial construction in 2006-08 was the GO Zone Act, which generated substantial short-term tax benefits for those investing in newly-built realty. To take advantage of the GO Zone benefits, however, new apartments in the Baton Rouge area had to have a certificate of occupancy in place prior to December 31, 2008. These federal tax incentives prompted initiation of construction for certain apartment units that might otherwise not have commenced. The 12/31/08 deadline (and the associated rush to complete units by then) might have resulted in a ripple throughout the local apartment market, but for the other considerations previously mentioned. The absence of this incentive should have slowed the influx of new units, though there are still 781 units under construction, and 1,281 more units proposed/ planned.
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multi-family Trends
In Spring 2008, we expected the local apartment market to become highly concessionary by the end of 2008, particularly in the Class A submarket. While it took a while longer for the ripple to surface, by latter 2009 we began to see free month and a free TV (or other similarly structured) concessions offered at a number of the upscale properties. As the vast majority of the incoming supply of units has been upscale, the Class A properties appear to have felt the brunt of the competitive pressures from the incoming units. Their competitive adjustments in 2009-10 appear to have eventually forced rental adjustments by the Class B properties, who then put pricing pressure on Class C properties. Nobody is bullet-proof. With the additional supply absorbed in 2012, competitive pressures appear to be subsiding, and rental increases have proven more readily attainable.
submarket that resulted from the completion of 3 complexes with a combined total of 512 units. BRAA reported 32% vacancy in this submarket in their 2011 survey. Absorptions in the 3 new complexes have, however, been strong (roughly 20 units per month), and the newer complexes are now reporting occupancies of over 90%.
The critical factors that will ultimately drive the long-term demand for, and
absorption of, additional housing units in the Baton Rouge area are the number of jobs that can be retained locally (where the jobs go, the population will follow) and the ability of our infrastructure (roads, schools, governing bodies) to accommodate this growth and maintain the character and marketability of Baton Rouge as a place to live. Baton Rouge appears to have dodged the brunt of the recession, and remains well positioned to prosper. With numerous recent announcements of major industrial expansions and planned construction of multi-billion dollar facilities in the Baton Rouge MSA, we expect further population expansion (and correspondingly positive absorptions of new and existing apartment units).
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multi-family Trends
Staying Strong... Building Stronger! Stronger
Graphs illustrating the recent trends in apartment rentals are provided in the following pages. These will be followed by synopses of new multifamily residential (apartment and condo) construction projects, and more detailed rental/vacancy charts. For more detailed discussions and information, please call us (we provide professional consulting services) or go to www.cookmoore.com or www.batonrougetrends.com.
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multi-family Trends
Roughly 5,682 new apartment units were completed from when Katrina hit on August 29, 2005 through the end of 2011, then 632 units were built in 2012, now 781 units are under construction, and 1,281 units are proposed for construction in 2013-14). The total new rental supply for 2006-14 could exceed 8,300 units, which would equate to roughly 930 units per year over a 9-year span (if all of the planned units are completed by the end of 2014). The new apartment complexes built, underway and/or planned in Baton Rouge area are listed on the following pages. Apartment Complexes Completed in 2012 in the Baton Rouge MSA
Project Name, Developer & Location
The Woodlands (David Mulkey/Tom Scott, Dovetail Cos) Ben Hur off Nicholson Bellhaven Trace (Trilateral Development, LLC) Wooddale Blvd 438 Main Street (Helena Cunningham/Norman Chenevert) 438 Main Street Hooper Springs (CDI, Idaho) Hooper Road Woodcrest (LDG Development) 1900 Lobdell Blvd Mallard Crossing (LDG Development) Greenwell Springs Road Total for 2012
Baton Rouge experienced a recovery period in apartment construction from 1995 to 2005. During this period, 36 apartment complexes containing a total of 6,800 rental units (excluding for sale condos) were built in Baton Rouge. Very few of those new complexes offered standard, mid-grade apartment units (i.e., virtually all were oriented toward "niche" markets, such as students or lower-income households). The vast majority of the new supply over the past 20 years has been oriented toward either more affluent tenants, or lower-income households.
# of Units
291
Completion Date
2012
Comments
Upscale/Luxury Student-Oriented units financed conventionally
31
2012
22
2012
48
2012
48
2012
192
2012
632
Apartment Complexes Under Construction in 2013 in the Baton Rouge MSA Cook, Moore & Associates
Project Name, Developer & Location
GCHP- Mid-City - Olinde Building (Gulf Coast Housing Partners)
# of Units
32
Comments
Affordable Housing (Tax Credit) units financed under subsidy programs; Construction Underway Affordable Housing (Tax Credit) units financed under subsidy programs; Construction Underway Upscale/Luxury Student-Oriented units financed conventionally; Construction Underway Upscale/Luxury Conventional units financed via HUD 221d4; Construction Underway Upscale Luxury Student-Oriented Units Construction Underway
The Elysian (Gulf Coast Housing Partners) Spanish Town Road east of I-110 University Edge (Hallmark Campus Properties) West McKinley at Iowa High Grove (Domain Companies) Picardy Blvd off I-10 Fairfield at Baton Rouge (Fairfield) Burbank at Ben Hur Road Total for 2013
100
2013
158
2013
192
2013
299
2013
781
Not included in the following list may be additional properties (in the planning and/or financing stages) for which the site has not been purchased, site plan approval has not been granted and/or plans have not been publicly announced. As construction of new units cannot occur without site plan approval and the process of acquiring such approval is highly political and speculative (as can be the site acquisition process), inclusion of such properties in a traditional pipeline analysis would be inappropriate.
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Apartment Complexes Proposed for 2013-2014 (Not Yet Under Construction) in the Baton Rouge MSA
Project Name, Developer & Location
Cypress Springs Elderly (CDI) Hooper Road east of Plank Road Gardens of Baton Rouge (Gary Hinton) Plank Road south of Hooper Road Burberry Estates (Burberry Estates Partners)
# of Units
144
Comments
Affordable Housing (Tax Credit) units financed under subsidy programs; Site cleared for construction Affordable Housing (Tax Credit) units financed under subsidy programs; Construction has not started Affordable Housing (Tax Credit) units financed under subsidy programs; Construction has not started Affordable Housing (Tax Credit) units Rehab of abandoned complex Construction has not started Affordable Housing (Tax Credit) units financed under subsidy programs; Construction has not started Upscale/Luxury Market-Rate units to be financed via HUD 221d4; Building acquired; conversion has not started Upscale/Luxury Market-Rate units to be financed conventionally; Site acquired; construction has not started Upscale/Luxury Market-Rate units to be financed conventionally; Site acquired; construction has not started Upscale/Luxury Market-Rate units to be financed via HUD 221d4; Site acquired; construction has not started
50
2013-14
32
2013-14
Renaissance Gateway (CDI) 650 North Ardenwood 1854 North Street (Gulf Coast Housing Partners)
208
2013-14
37
2013-14
Commerce Building (TJ Iarocci, New Orleans) 333 Laurel Street The District (Creekstone Development) Perkins Road near Pollard River House (Marc Blumberg) West McKinley at Iowa Audubon Apartment Homes (Heritage Construction) LA 64 west of LA 964, Zachary Total Units Planned
92
2013-14
312
2013-14
224
2013-14
182
2013-14
1,281
III.
Condominium Construction
A sourceIII. of housing sometimes overlooked is for sale condo construction. Numerous condo developments Condominium Construction were built and attracted reasonably rapid absorption through early 2007 (typically 5 to 10 units selling per month). Absorptions sinceA mid-2007 have been notably slower, as the reduced availability of mortgage financing for condo source of housing sometimes overlooked is for sale condo construction. Numerous purchasers has adversely impacted demand for condos. Fewer than 100 condo units have been built since 2008. Additional developments are known to be in the works. With the weak recent absorptions noted, it is unlikely an influx of units early will occur. mortgage financing becomes more available for condos, absorptions will 2007Until (typically 5 to 10 units selling perreadily month). Absorptions since mid-2007 likely remain relatively slow.
condo developments were built and attracted reasonably rapid absorption through
have been notably slower, as the reduced availability of mortgage financing for
Cook, Moore & Associates
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multi-family Trends
Staying Strong... Building Stronger! Stronger
condo purchasers has adversely impacted demand for condos. Fewer than 100 condo units have been built since 2008. Additional developments are known to be in the works. With the weak recent absorptions noted, it is unlikely an influx of units will occur. Until mortgage financing becomes more readily available for condos, absorptions will likely remain relatively slow.
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multi-family Trends
IV. Apartment Rent & Vacancy Statistics IV. Apartment Rent & Vacancy Statistics IV. Apartment Rent & Vacancy Statistics On the following pagestables are presented tables summarizing the compiled in IV. Apartment Rent & Vacancy Statistics On the following pages are presented summarizing the figures compiled in thefigures LSU/CMA apartment On the following pages are presented tables summarizing the figures compiled in the LSU/CMA apartment surveys performed in Fall/Winter 2012-13 the LSU/CMA apartment surveys performed in Fall/Winter surveys performed in Fall/Winter 2012-13 On the following pages are presented tables summarizing the figures compiled2012-13. in the LSU/CMA apartment Table 1 surveys performed in Fall/Winter 2012-13 Table 1 Apartment Data Table 1 by Area Apartment Data by (Fall 2012 Full Data Set)Area (Fall 2012 Full Data Set) Apartment Data by Area
Area Area ALL ALL Area 1 1 ALL 2 12 3 23 4 34 5 45 5 Complexes 154 Number of 154 Complexes 42 42 154 35 42 35 41 41 35 15 41 15 21 15 21 21 Number of Complexes Number of 0 BR 0 BR $601 $601 0$726 BR $726 $601 $596 $726 $596 $556 $556 $596 $510 $556 $510 $442 $510 $442 $442 1 BR
(Fall 2012 Full Data Set) Average Rent per Sq. Ft.
1 BR 2 BR 3 BR
3 BR
1 BR 1 BR 5.43% 5.43% 1 BR 4.63% 4.63% 5.43% 4.27% 4.63% 4.27% 4.98% 4.98% 4.27% 9.59% 4.98% 9.59% 8.28% 9.59% 8.28% 8.28%
4 BR 4 BR 6.87% 6.87% 4 BR 7.90% 7.90% 6.87% 0.00% 7.90% 0.00% 8.33% 8.33% 0.00% 8.33% 1.72% 1.72% 1.72%
Total Total 5.57% 5.57% Total 5.51% 5.51% 5.57% 4.41% 5.51% 4.41% 4.78% 4.78% 4.41% 9.28% 4.78% 9.28% 8.01% 9.28% 8.01% 8.01%
$717 1$758 BR $758 $717 $837 $758 $837 $721 $721 $837 $484 $721 $484 $521 $484 $521 $521
$1,214 $1,546 $1,812 $1.287 $1.484 $1.009 $1.102 $0.849 $0.982 $0.810 $1.035 $1.152 $1.369 $0.901 $1.060 6.27% 5.62% $995 $1,217 $937 $1.428 $1.131 $0.919 $0.910 $0.728 $0.980 5.71% $1,214 $1,812 $1.484 $1.102 $0.982 $1.035 $1.369 $1.060 5.62% $1,217 $937 $1.428 $1.131 $0.919 $0.910 $0.728 $0.980 5.71% $906 $819 $1.140 $0.988 $0.809 $0.701 $0.518 $0.844 4.88% $906 $1,217 $679 $906 $679 $681 $679 $681 $681 $819 $937 $819 $756 $756 $756 $1.140 $1.131 $0.988 $0.919 $0.809 $0.910 $0.701 $0.728 $0.518 $0.980 $0.844 5.71% 4.88% $1.428 $1.020 $0.743 $0.617 $0.570 $0.646 0.00% $1.140 $0.844 $1.020 $0.988 $0.743 $0.809 $0.617 $0.701 $0.570 $0.518 $0.646 4.88% 0.00% $0.967 $0.772 $0.648 $0.633 $0.604 $0.685 8.00% $1.020 $0.646 $0.967 $0.743 $0.772 $0.617 $0.648 $0.570 $0.633 $0.604 $0.685 0.00% 8.00% $0.967 $0.772 $0.648 $0.633 $0.604 $0.685 8.00%
0 BR 0 BR $715 $715 0$958 BR $958 $715 $645 $958 $645 $645 $510 $510 $367 $510 $367 $367
1 BR
Table 2 Table 2 Apartment Data byTable Area 2 for Large Complexes Apartment Data by Area forSet) Large Complexes (Fall 2012 Full Data (Fall 2012 Full Data Set) Apartment Data by Area for Large Complexes
(Fall 2012 Full Data Set) Average Rent per Sq. Ft.
1 BR 2 BR 3 BR 3 BR 4 BR 4 BR $1,597 $1,597 4 BR $1,861 0 BR 0 BR $1.148 $1.148 0 BR $1.810
Total Total 5.00% 5.00% Total 5.18% 5.18% 5.00% 4.92% 5.18% 4.92% 4.95% 4.95% 4.92% 5.42% 4.95% 5.42% 4.61% 5.42% 4.61% 4.61%
$777 1$831 BR $831 $777 $927 $831 $927 $720 $720 $927 $536 $720 $536 $438 $536 $438 $438
$1,022 $1,068 $1,254 $1,597 $1,861 $1.148 $1.810 $1.061 $1.149 $0.889 $1.010 $0.824 $0.993 $1.096 $1.315 $0.941 $1.076 6.98% 3.85% $927 $1,129 $1,356 $1.421 $1.225 $1.030 $0.981 $1.089 8.16% $1,022 $1.810 $1.076 $1,129 $1,254 $1,356 $1,861 $1.421 $1.149 $1.225 $1.010 $1.030 $0.993 $0.981 $1.315 $1.089 3.85% 8.16% $853 $888 $819 $0.988 $0.818 $0.682 $0.518 $0.852 $853 $1,129 $635 $853 $635 $520 $635 $520 $520 $888 $1,356 $750 $888 $750 $649 $750 $649 $649 $819 $819 --
$0.988 $1.030 $0.818 $0.981 $0.682 $0.518 $0.852 8.16% 4.79% $1.421 $1.225 $1.089 4.04% $1.020 $0.754 $0.615 $0.592 $0.644 0.00% 5.44% $0.988 $0.852 4.79% $1.020 $0.754 $0.818 $0.615 $0.682 $0.592 $0.518 $0.644 0.00% 5.44% $0.711 $0.614 $0.521 $0.571 $0.559 11.36% 5.57% $1.020 -$0.644 $0.711 $0.754 $0.614 $0.615 $0.521 $0.592 $0.571 $0.559 0.00% 11.36% 5.44% 5.57% $0.711 $0.614 $0.521 $0.571 $0.559 11.36% 5.57%
Data Set Data Set All Complexes All Complexes Data Set Large Complexes All Complexes Large Complexes Large Complexes
With 0 BR Units With 0 BR Units Units Units Units Units Complexes 22 136 147 148 With 0 BR With 1 BR With 2 BR With96 3 BR With21 4 BR Total # of 22 136 147 96 21 148 Units Units Units Units Units Complexes 8 53 54 37 8 51 22 136 147 96 21 148 8 53 54 37 8 51 8 53 54 37 8 51
(Fall 2012 Full Data Set) Number of Complexes Number of Complexes With 1 BR With 2 BR With 3 BR With 4 BR Total # of Units Units Units Units With 1 Number BR With 2 of BRComplexes With 3 BR With 4 BR Complexes Total # of
Table 4 Table 4 TableSet 4 Statistics Fall 2012 Data Fall 2012 Data (Fall 2012 FullSet Data Statistics Set) (Fall Data 2012 Full Data Set) Fall 2012 Set Statistics
0 BR Units 0 BR Units 0 415 BR 415 Units 172 415 172 172
Number of Units by Data Set Number of Units by Data Set 1 BR 2 BR 3 BR 4 BR Number of Units by Data Set Units Units Units Units 1 BR 2 BR 3 BR 4 BR
Units 12,837 2 BR 12,837 Units 7,462 12,837 7,462 7,462 Units 3,241 3 BR 3,241 Units 1,675 3,241 1,675 1,675
Total Units Total Units 27,076 Total 27,076 Units 16,004 27,076 16,004 16,004
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Cook, Moore & Associates Cook, Moore & Associates Cook, Moore & Associates
multi-family Trends
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Table 3 Apartment Data by Zip Code
(Fall 2012 Full Data Set) (Zip Codes with More Than 1 Complex)
Zip Code 70802 70805 70806 70807 70808 70809 70810 70814 70815 70816 70817 70820 Number of Complexes 4 5 23 2 15 22 9 3 16 31 4 16 Number of Units 617 718 2,987 168 2,691 4,462 1,654 437 2,444 7,394 605 2,283
Average Rent
per Unit $824 $529 $679 $575 $890 $985 $1,008 $658 $610 $810 $886 $1,045 per Sq. Ft. $1.153 $0.728 $0.746 $0.654 $1.053 $0.988 $0.988 $0.746 $0.661 $0.864 $0.819 $1.133
Vacancy
Total 6.97% 9.47% 6.73% 4.17% 4.24% 4.82% 5.32% 1.37% 7.77% 5.09% 2.81% 6.79%
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RETAIL Trends
indicators. The rentals indicated are reflective of varying lease terms, with some
shopping centers requiring expense reimbursements from tenants in addition to base rentals and some shopping centers requiring no additional reimbursements. To arrive at consistent rentals, any additional reimbursements paid by tenants (generally for common area maintenance
40
r e ta i l T r e n d s
Staying Strong... Building Stronger! Stronger
(CAM), taxes and insurance) are added to each shopping centers calculated average rental to arrive at a total average rental. Jonathan Walker, CCIM Speaker, Trends Maestri-Murrell Charlie Colvin, CCIM Beau Box Wade Greene Maestri-Murrell Austin Earhart Beau Box 2013 RETAIL TRENDS COMMITTEE Attempts to survey each shopping center are made each year, however, due to turnover in management and/or ownership, results for each shopping center are not available every year. Comparison of the total surveyed leasable space and number of shopping center indicated in each time period should not be taken as an indication of new construction and/ or demolition, but as an indication of properties for which data was provided.
The Vacancy Rate figures presented should not be viewed as a matched sample, as the figures for each time period reflect the results for each individual survey. They are, however, considered to be indicative of general market conditions.
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Justin Langlois, CCIM Mike Falgoust & Associates Sean McDonald, MIA Cook, Moore & Associates Evan Scroggs Latter & Blum Colin Smith Kurz and Hebert Dottie Tarleton, CCIM Stirling Properties
Only shopping centers of over 15,000 square feet of leasable space are included in the survey. Numerous small strip centers throughout the Baton
Rouge area are excluded from the analysis due to the minimal size requirement for the survey.
Baton Rouges two enclosed shopping malls, the Mall of Louisiana and
Cortana Mall, are excluded from the survey. Due to the large size of these centers and significantly higher rentals collected for mall spaces compared to standard multi-tenant retail spaces, these properties have historically caused significant skewing of the vacancy and average rental results when included in past reports. They were eliminated from the survey in 2007, with results from earlier surveys revised to exclude these
centers.
41 3
r e ta i l T r e n d s
Baton Rouges three completed lifestyle centers Perkins Rowe, The Boulevard at the Mall of Louisiana and Towne Center were surveyed for the first time in 2008. As with the shopping malls, these centers collect significantly higher rentals, inclusion of which would likely significantly skew the data. These three centers are generally excluded from the figures presented, and specific information will be given on these centers during the actual presentation.
Analyses are performed by Vacancy Rate (Table 1), Size/Type (Table 2), Age (Table 3), Location (Table 4) and both Location and Type (Table 5).
Acadian Village was demolished in 2008 but is now under redevelopment. The property is being pre-leased, and has been included in this years survey.
Excluding the lifestyle centers, a total of 8,616,676 square feet of leasable space was surveyed, with 849,429 square feet (9.86%) reported to be vacant. This vacancy rate is only slightly higher than the 9.23% reported in the 2012 survey, and lower 10.33% vacancy rate reported in the 2011 survey, and much lower than the 12.55% vacancy rate in the 2010 survey.
Average Total Collections (rent and expense reimbursements) for non-anchor space were $16.21/square foot, which reflects a 3% drop in rental rates from the 2012 survey.
42 2
Ad will run as is unless approval or final revisions are received by the close of business today. Additional revisions must be requested and may be subject to production fees. Carefully check this ad for: CORRECT ADDRESS CORRECT PHONE NUMBER ANY TYPOS
This ad design Louisiana Business, Inc. 2011. All rights reserved. Phone 225-928-1700 Fax 225-926-1329
Property Management
Benjamin Stalter
Linda Jackson
George Murrell
Lawrence Maestri
9018 Jefferson Highway 225.298.1250 www.mmcre.com 225.298.1300 for Virtual Office Info.
r e ta i l T r e n d s
ANALYSIS BY VACANCY RATE
Table 1 contains the analysis by vacancy rate. The overall vacancy rate has increased slightly to 9.86% from 9.23% in Spring 2012, but is lower than the 10.33% in Spring 2011, 12.55% in Spring 2010 and 12.05% in Spring 2009. Only 48% of surveyed centers in Spring 2009 reported vacancy rates of 10% or less, 56% of surveyed centers in Spring 2010, 58% of surveyed centers in Spring 2011, 65% of surveyed centers in Spring 2012, and 64% of surveyed centers in Spring 2013 reported vacancy rates of 10% or less. Only 4% of centers reported vacancies over 50% in Spring 2013 (up from 3% in Spring 2012). 17% of the surveyed centers reported vacancies of 10.01% to 25% (up from 16% in Spring 2012, (25% in Spring 2011, 21% in Spring 2010 and 33% in Spring 2009), while 16% reported vacancies of 25.01% to 50% (up from 15% in Spring 2012 and up from 13% in Spring 2011). Vacancy rates for the past two years are the lowest they have been since 2007.
Table 1 Shopping Centers by Vacancy Rate
(Excluding Lifestyle Centers)
Period Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009
Percent of Total Responding 64% 65% 58% 56% 48% 17% 16% 25% 21% 33% 16% 15% 13% 18% 15% 4% 3% 4% 6% 4%
Total Surveyed Leasable Space 6,153,817 6,175,720 5,530,878 4,934,334 4,444,038 897,066 1,094,318 1,200,694 1,032,416 1,678,505 1,257,715 1,143,286 1,030,623 1,165,352 1,328,080 310,078 139,835 276,185 395,556 174,527 8,616,676 8,553,159 8,038,380 7,527,658 7,625,150
Percent of Total Responding 71% 72% 69% 66% 58% 10% 13% 15% 14% 22% 15% 13% 13% 15% 17% 4% 2% 3% 5% 2%
Total Vacant Space 108,461 139,153 139,076 126,244 75,398 131,570 174,367 172,996 152,918 263,888 418,968 386,310 344,083 402,670 468,019 191,630 89,732 174,374 263,055 111,392 849,429 789,562 830,529 944,887 918,697
Percent of Total Responding 13% 18% 17% 13% 8% 15% 22% 21% 16% 29% 49% 49% 41% 43% 51% 23% 11% 21% 28% 12%
10% or Less
10.01% to 25%
1 -8 5 -10
25.01% to 50%
1 5 -5 4
Over 50%
1 -1 -1 2
Total
1 11 4 8
44 2
r e ta i l T r e n d s
Staying Strong... Building Stronger! Stronger
ANALYSIS BY SIZE/TYPE
Table 2 contains the analysis by shopping center size/type. The surveyed shopping centers are categorized based on discussions with local leasing agents in cooperation with CID and the Greater Baton Rouge Association of REALTORS and definitions used by the Urban Land Institute and International Council of Shopping Centers. The shopping center types are as follows: Convenience Centers (under 30,000 square feet) typically provide for the
sale of convenience goods and personal services without having a standard anchor space.
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for the sale of convenience goods and personal services with a grocery anchor space.
clothing, hardware, and appliances, in addition to convenience goods and personal services. Typically, these are built around a small department, variety, or discount store.
merchandise, furniture and home furnishings, as well as services and recreational facilities. These larger centers are often built around one or two full-line department stores that are generally larger than 100,000 square feet.
40% of the surveyed centers are considered to be Convenience Centers, though only 11% (980,321 square feet) of the surveyed leasable space is located in these centers. 40% of the surveyed centers are considered to be Neighborhood Centers, which contain 32% (2,771,455 square feet) of the surveyed leasable space. 17% of the surveyed centers and 35% of the surveyed leasable space (2,990,007 square feet) are considered to be Community Centers, while 3% of the surveyed centers and 22% of the surveyed leasable space (1,874,893 square feet) are considered to be Regional Centers.
45
r e ta i l T r e n d s
Since the Spring 2012 survey, vacancy rates have increased in every shopping center type except for Convenience centers, which noted only a slight decrease (12.90% to 11.27%). The highest vacancies are noted in the unanchored Community Centers (12.98%), while Regional Centers continue to have a low vacancy rate (1.15%). Convenience Centers have a vacancy rate of 11.27%, while Neighborhood Centers have a vacancy rate of 11.89%. 46% of the reported vacant space is located in Community Centers, while only 3% is located in Regional Centers. 13% is located in Convenience Centers and 39% is located in Neighborhood Centers. The highest collections for non-anchor space were noted in Regional Centers ($20.59/square foot). The lowest average collections were noted in Neighborhood Centers ($13.77/square foot).
Period Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009
Percent of Total Responding 40% 41% 40% 42% 37% 40% 38% 40% 40% 40% 17% 17% 16% 15% 19% 3% 3% 4% 4% 4%
Total Surveyed Leasable Space 980,321 1,023,283 894,199 681,578 619,379 2,771,455 2,664,976 2,626,725 2,511,681 2,390,861 2,990,007 2,990,007 2,624,550 2,248,742 2,679,675 1,874,893 1,874,893 1,908,122 1,873,036 1,873,036 8,616,676 8,553,159 8,038,380 7,527,658 7,625,150 975,555 610,000 610,000 440,000 1,010,000
Percent of Total Responding 11% 12% 11% 9% 8% 32% 31% 33% 33% 31% 35% 35% 33% 30% 35% 22% 22% 24% 25% 25%
Total Vacant Space 110,517 132,027 149,011 93,888 81,810 329,393 290,490 270,074 346,439 320,650 388,036 339,755 395,557 413,970 480,579 21,483 27,290 39,645 35,467 23,580 849,429 789,562 830,529 944,887 918,697 68,041 3,000 10,343 7,500 67,000
Percent of Total Responding 13% 17% 18% 10% 9% 39% 37% 33% 37% 35% 46% 43% 48% 44% 52% 3% 3% 5% 4% 3%
Vacancy Rate 11.27% 12.90% 16.66% 13.78% 13.21% 11.89% 10.90% 10.28% 13.79% 13.41% 12.98% 11.36% 15.07% 18.41% 17.93% 1.15% 1.46% 2.08% 1.89% 1.26% 9.86% 9.23% 10.33% 12.55% 12.05% 6.97% 0.49% 1.70% 1.70% 6.63%
Average Center Size 19,606 20,064 19,871 18,421 18,769 56,560 56,702 58,372 58,411 59,772 142,381 142,381 145,808 140,546 141,036 468,723 468,723 477,031 468,259 468,259 69,489 69,538 69,701 69,701 76,252 325,185 305,000 305,000 440,000 336,667
2 2 2 3
0 3 2 -3
0 0 0 0
0 -33,229 35,086 0
0 -8,308 8,772 0
1 11 4 8
Lifestyle Centers
1 0 -1 -2
65,041 -7,343
6.48% -1.21%
20,185 0
46 2
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r e ta i l T r e n d s
ANALYSIS BY AGE
Table 3 contains the analysis by age, with the shopping centers categorized based on the year of their construction. This year we began looking at newer centers that were built in 2006 or later. Consisting of 886,546 square feet, they not only had the lowest vacancy rate at 4.13%, but had the highest rental rate at $22.44/ square foot. The second set of shopping centers consists of 44 properties that have been constructed from 2000 - 2005. There were 11 more recently-built centers included in Spring 2010 than in Spring 2009, primarily due to the surveying of Livingston and Ascension Parishes (which have experienced substantial retail growth in the past decade) for the second time. Two of the five additional centers included in Spring 2011 are centers in Central, LA that previously had not been surveyed (one completed in 2006 and the other in early 2011). These newer centers report a Spring 2013 vacancy rate of 4.23%, compared to the Spring 2012 vacancy rate of 5.41% and the Spring 2011 vacancy rate of 5.15%. 39.19% of the space is anchor space and average total collections for non-anchor space are $20.84/square foot. The next set of shopping centers consists of 11 centers constructed between 1995 and 1999. These centers report a Spring 2013 vacancy rate of 3.39%, which is slightly better than the Spring 2012 vacancy rate of 4.08% and Spring 2011 vacancy of 4.21%. 64.27% of the space is anchor space and average total collections for non-anchor space are $20.27/square foot. 20 surveyed shopping centers were constructed between 1985 and 1995. These centers report a Spring 2013 vacancy of 4.70%, which is down from the Spring 2012 vacancy rate of 8.05% and the Spring 2011 vacancy rate of 8.38%. 34.20% of the space is anchor space and average total collections for non-anchor space are $16.53 per square foot.
48 2
r e ta i l T r e n d s
Staying Strong... Building Stronger! Stronger
15 surveyed shopping centers were constructed between 1980 and 1984. These centers report a Spring 2013 vacancy rate of 25.31% which is up from the Spring 2012 vacancy rate of 15.47% and the Spring 2011 vacancy rate of 22.49% 42.06% of the space is anchor space and average total collections for non- anchor space are $12.04/square foot. 34 surveyed shopping centers (representing 32% of the surveyed leasable space and 44% of the vacant space) were constructed before 1980. These centers report a Spring 2013 vacancy rate of 13.58%, up from the Spring 2012 vacancy rate of 12.51% and the Spring 2011 vacancy rate of 13.44%. 25.56% of the space is anchor space and average total collections for non-anchor space are $12.80/square foot. The lowest rentals and highest vacancy are noted in the shopping centers built before 1985. These centers represent 39% of the surveyed shopping centers, 45% of the surveyed leasable space and 76% of the total vacant space.
20 13
2006 or Later
27
22%
1,381,173
16%
59,218
7%
4.29%
51,155
40.08%
$19.77
2000 or Later
Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009
35% 35% 33% 32% 23% 9% 10% 9% 11% 10% 16% 15% 15% 17% 16% 12% 10% 11% 12% 14% 27% 29% 23% 25% 30%
1 2 5 11
2,267,719 2,210,171 2,160,371 1,726,087 1,534,719 1,029,585 1,044,585 979,671 960,512 939,192 1,483,179 1,488,179 1,480,322 1,535,822 1,405,108 1,089,854 1,050,278 1,045,896 960,364 1,125,672 2,746,339 2,759,946 2,372,120 2,344,873 2,620,459 8,616,676 8,553,159 8,038,380 7,527,658 7,625,150
26% 26% 25% 21% 20% 12% 12% 11% 12% 12% 17% 17% 17% 19% 19% 13% 12% 12% 12% 15% 32% 32% 28% 29% 35%
95,844 119,533 111,178 129,404 73,900 34,889 42,615 41,272 30,414 22,461 69,774 119,787 123,985 155,643 126,948 275,842 162,478 235,202 194,453 234,137 373,080 345,149 318,892 434,973 461,251 849,429 789,562 830,529 944,887 918,697
11% 14% 14% 16% 8% 4% 5% 5% 4% 2% 8% 14% 16% 19% 13% 32% 19% 30% 23% 25% 44% 41% 40% 52% 49%
4.23% 5.41% 5.15% 7.50% 4.82% 3.39% 4.08% 4.21% 3.17% 2.39% 4.70% 8.05% 8.38% 10.13% 9.03% 25.31% 15.47% 22.49% 20.25% 20.80% 13.58% 12.51% 13.44% 18.55% 17.60% 9.86% 9.23% 10.33% 12.55% 12.05%
51,539 51,399 52,692 47,947 61,389 93,599 87,049 89,061 80,043 85,381 74,159 78,325 82,240 80,833 82,653 72,657 80,791 74,707 73,874 75,045 80,775 76,665 84,719 83,745 81,889 69,489 69,538 69,701 69,701 76,252
1995-1999
-1 1 -1 1
1985-1994
1 1 -1 2
1980-1984
2 -1 1 -2
Before 1980
-2 8 0 -4
Total
1 11 4 8
49
r e ta i l T r e n d s
ANALYSIS BY GEOGRAPHIC AGE
Table 4 contains the Analysis by Geographic Area. The Geographic Areas used in this survey for shopping centers in Baton Rouge are long-standing and are defined as follows:
Area 1 South of Interstates 10 and 12 and west of Airline Highway Area 2 North of Interstates 10 and 12 and south and west of Airline Highway also includes shopping centers along Plank Road between Airline Highway and Hooper Road.
Area 3 North of Choctaw Drive and Airline Highway, excluding Zachary and Plank Road shopping centers between Airline Highway and Hooper Road
Area 4 South of Choctaw Drive and east of Airline Highway also includes shopping centers along Airline Highway between Interstate 12 and Florida Boulevard
Area 5 Zachary (surveyed beginning in 2008) Area 6 Ascension Parish (surveyed beginning in 2010) Area 7 Livingston Parish (surveyed beginning in 2010)
The highest average non-anchor collections ($21.08/square foot) are noted in Area 1 and the lowest vacancy rate (2.49%) is noted in Area 1, while Area 3 reports the lowest total non-anchor collections ($10.64/square foot) and Area 5 reports the highest vacancy rate (22.76%). Area 7 is Livingston Parish and includes only 2 responding centers (both non-anchored), while Area 1 contains many of the newer retail corridors in Baton Rouge (along Bluebonnet Boulevard, Siegen Lane, and Perkins Road).
50
r e ta i l T r e n d s
Staying Strong... Building Stronger! Stronger
Table 4 Shopping Centers by Geographic Area
(Excluding Lifestyle Centers)
Geographic Area Area 1 (South of I-10 & West of Airline) Period Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009 Spring 2013 Spring 2012 Spring 2011 Spring 2010 Number of Responding Centers 34 33 32 27 30 22 22 18 18 19 13 13 11 9 12 30 30 27 29 31 8 8 7 8 8 15 15 15 15 Percent of Total Responding 27% 27% 26% 24% 28% 18% 18% 15% 16% 18% 10% 10% 9% 8% 11% 24% 24% 22% 26% 29% 6% 6% 6% 7% 7% 12% 12% 12% 12% Change from Previous Period 1 1 5 -3 30 0 4 0 -1 19 0 2 2 -3 12 0 3 -2 -2 31 0 1 -1 0 8 0 0 0 Total Surveyed Leasable Space 3,025,885 2,985,937 2,860,041 2,336,955 2,575,611 1,290,684 1,290,684 1,188,958 1,105,638 1,215,551 870,764 788,188 703,188 617,072 857,880 2,432,246 2,491,253 2,307,396 2,470,896 2,680,696 296,236 296,236 277,936 296,236 295,412 626,330 626,330 626,330 626,330 Percent of Total Responding 35% 35% 33% 29% 34% 15% 15% 14% 14% 16% 10% 9% 8% 8% 11% 28% 29% 27% 31% 36% 3% 3% 3% 3% 4% 7% 7% 7% 7% Change from Previous Period 39,948 125,896 523,086 -238,656 2,575,611 0 101,726 83,320 -109,913 1,215,551 82,576 85,000 86,116 -240,808 857,880 -59,007 183,857 -163,500 -209,800 2,680,696 0 18,300 -18,300 824 295,412 0 0 0 Total Vacant Space 75,276 74,163 96,020 85,766 79,801 167,752 194,799 166,762 179,740 190,180 185,130 92,961 112,400 59,816 130,609 319,928 323,586 327,915 470,041 422,234 67,431 66,518 60,850 72,257 95,873 30,762 34,806 63,432 64,143 Percent of Total Responding 9% 9% 12% 10% 8% 20% 23% 21% 22% 20% 22% 11% 14% 7% 14% 38% 38% 42% 57% 45% 8% 8% 7% 9% 12% 4% 4% 7% 8% Change from Previous Period 1,113 -21,857 10,254 5,965 79,801 -27,047 28,037 -12,978 -10,440 190,180 92,169 -19,439 52,584 -70,793 130,609 -3,658 -4,329 -142,126 47,807 422,234 913 5,668 -11,407 -23,616 95,873 -4,044 -28,626 -711 Vacancy Rate 2.49% 2.48% 3.36% 3.67% 3.10% 14.73% 15.09% 14.03% 16.26% 15.65% 21.26% 11.79% 15.98% 9.71% 15.22% 13.15% 12.99% 14.21% 19.02% 15.75% 22.76% 22.45% 21.89% 24.39% 32.45% 4.91% 5.56% 10.13% 10.24% Change from Previous Period 0.01% -0.88% -0.31% 0.57% 3.10% -0.36% 1.06% -2.23% 0.61% 15.65% 9.47% -4.19% 6.27% -5.51% 15.22% 0.16% -1.22% -4.81% 3.27% 15.75% 0.31% 0.56% -2.50% -8.06% 32.45% -0.65% -4.57% -0.11% Average Center Size 88,997 90,483 89,376 86,544 85,854 58,667 58,667 66,053 61,424 63,976 66,982 60,630 63,926 68,564 71,490 81,075 83,042 85,459 85,203 86,474 37,030 37,030 39,705 37,030 36,927 41,755 41,755 41,755 41,755 Change from Previous Period -1,486 1,107 2,832 690 85,854 0 -7,386 4,629 -2,552 63,976 6,352 -3,296 -4,638 -2,926 71,490 -1,967 -2,417 256 -1,271 86,474 0 -2,675 2,675 103 36,927 0 0 0 Percent Anchor Space 52.25% 52.80% 57.07% Non-Anchor Collections (Rent + Reimb.) in $/SF $21.08 $20.13 $20.94 $39.92 $35.27 Area 2 (North of I-10 & South/West of Airline) 14.73% 14.57% 18.51% $14.49 $14.71 $13.54 $99.45 $79.47 Area 3 (North of Choctaw & North/East of Airline) 31.26% 31.34% 37.38% $10.64 $11.16 $12.30 40.39% 43.92% 46.51% $14.27 $13.59 $14.63
Area 5 (Zachary)
2 2 2 2
2% 2% 2% 2%
0 0 0
1% 1% 1% 1%
0 0 0
0% 0% 0% 2%
0 0 0
Total
Spring 2013 Spring 2012 Spring 2011 Spring 2010 Spring 2009
1 11 4 8 100
20 13
Note: Airline Hwy Shopping Centers between I-12 and Florida Blvd Interchange are included in Area 4, Plank Rd Shopping Centers south of Hooper Rd are included in Area 2
3/6/2013 10:42:10 AM
r e ta i l T r e n d s
Analysis by Geographic Area and Type
Table 5 presents a breakdown of responses from anchored and unanchored centers in each of the geographic areas. The lowest vacancies in anchored centers are noted in Area 1 (.75%) and Area 6 (1.60%), while the highest is noted in Area 5 (27.97%, which is based on a single anchor vacancy). The highest collections for anchored centers are noted in Area 1 ($18.45/square foot) and the lowest collections are noted in Area 5 ($9.07/square foot). The lowest vacancies in unanchored centers are noted in Area 6 (6.47%), while the highest vacancies are noted in Area 4 (13.55%). The highest collections for unanchored centers are noted in Area 1 ($23.37/ square foot) and the lowest collections are noted in Area 3 ($11.20/square foot).the highest vacancy rate (22.76%). Area 7 is Livingston Parish and includes only 2 responding centers (both non-anchored), while Area 1 contains many of the newer retail corridors in Baton Rouge (along Bluebonnet Boulevard, Siegen Lane, and Perkins Road).
Table 5 Shopping Centers by Geographic Area and Type
(Spring 2012 - Excluding Lifestyle Centers)
Geographic Area Area 1 (South of I-10 & West of Airline) Area 2 (North of I-10 & South/West of Airline) Area 3 (North of Choctaw & North/East of Airline) Area 4 (South of Choctaw & East of Airline)
$44.73
7 15 22
32% 68%
50% 50%
71% 29%
$86.97
6 7 13
46% 54%
68% 32%
81% 19%
14 16 30
47% 53%
79% 21%
78% 22%
Area 5 (Zachary)
2 6 8
25% 75%
60% 40%
74% 26%
2 13 15
13% 87%
32% 68%
10% 90%
Total
43 81 124
35% 65%
67% 33%
70% 30%
Note: Airline Hwy Shopping Centers between I-12 and Florida Blvd Interchange are included in Area 4, Plank Rd Shopping Centers south of Hooper Rd are included in Area 2 Both Livingston Parish responding centers are un-anchored
52 2
r e ta i l T r e n d s
Staying Strong... Building Stronger! Stronger
Summary
Of the 8.616 million square feet of leasable space represented in our sample (not including lifestyle centers), 9.86% is reported as vacant. This represents only a .63% increase in vacancy from the Spring 2012 survey. It should be noted that these figures do not represent a matched sample of shopping centers, but only reflect the results of each survey. Regional centers, those over 250,000 sq/ft, continue to have low vacancy rates and demand higher rental rates. After peaking at its highest in the past 5 years in Spring 2010, the overall vacancy rate has stabilized the past two years, and is more in line with the vacancy this area enjoyed in 2007, which was 9.53%.
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FINANCE Trends
54 2
FINANCE Trends
OUTSTA ANDING COMMERC C CIAL REAL L ESTATE D age DEBT Co ommercial & Multifam mily Mortga Banks an nd thrifts co ontinue to hold h the maj jority of com mmercial re eal estate de ebt in the United U States as of the third d quarter of 2012. 2 Secur ritized lende ers hold the second larg gest piece, th hough p red ductions and d payoffs ha ave outpace ed new orig ginations. Ag gency and GSEG regular principal backed mortgage pools p hold the third position, p fo ollowed by life insura ance compa anies, ment and othe er lenders. Others,9.8 governm 8 Co ommercial & Multifam mily Mortga age Debt Ou utstanding By Inv vestor Group p, As of Third d Quarter 20 012
States as of the third d quarter of 2012. 2 Secur ritized lende ers hold the second larg gest piece, th hough p red ductions and d payoffs ha ave outpace ed new orig ginations. Ag gency and GSEG regular principal backed mortgage pools p hold the third position, p fo ollowed by life insura ance compa anies, governm ment and othe er lenders. Debt Ou utstanding By Inv vestor Group p, As of Third d Quarter 20 012
LifeInsuranc ce Companies,13.5
8 Others,9.8
BanksandThrifts, 3 34.3
LifeInsuranc ce Companies,13.5
BanksandThrifts, 3 34.3
20 13
Source: MBA Comm mercial/Multifamily y Mortgage Debt Outstanding, O Third d Quarter 2012
Source: MBA Comm mercial/Multifamily y Mortgage Debt Outstanding, O Third d Quarter 2012
Changes in amounts outstanding across the various sectors since the financial crash ofshow 2008 show consistent with of the portfolios of asset backed securities lenders consistent trends with trends the portfolios asset backed securities lenders declining year over
year and all other sectors increasing their portfolios. declining year over year and all other sectors increasing their portfolios. Commercial & Multifamily Mortgage Debt Outstanding By Sector, Through Third Quarter 2012 ($ millions) Changes in amounts outstanding across the various sectors since the financial crash of 2008
55 3
Within just the Multifamily sector there have been significant increases in the portfolios of the Government Sponsored Enterprises, Fannie Mae and Freddie Mac, leading to record origination
FINANCE Trends
Within just the Multifamily sector there have been significant increases in the portfolios of the Government Sponsored Enterprises, Fannie Mae and Freddie Mac, leading to record origination volumes and outstanding balances. The rate of growth is not sustainable, however, and in 2013 these agencies have been charged with reducing originations by ten percent. Filling the gap will be increased originations from life insurance companies and a recovering CMBS market. Already, many large banks and smaller boutique shops have restarted their CMBS platforms and intend on focusing on multifamily. The future of Fannie Mae and Freddie Mac remains uncertain. Still under the conservatorship of the Federal Government and administered by the Federal Housing Finance Agency, the GSEs continue to operate under the specter of sweeping reforms
Changes in amounts outstanding across the various sectors since the financial crash of 2008 show consistent trends with portfolios of asset backed securities lenders declining year over and cooperation inthe Congress. year and all other sectors increasing their portfolios.
and restructuring. Any such reforms or restructuring, however, will require agreement
Commercial & Multifamily Mortgage Debt Outstanding By Sector, Through Third Quarter 2012 ($ millions)
56
Within just the Multifamily sector there have been significant increases in the portfolios of the Government Sponsored Enterprises, Fannie Mae and Freddie Mac, leading to record origination volumes and outstanding balances. The rate of growth is not sustainable, however, and in 2013 these agencies have been charged with reducing originations by ten percent. Filling the gap will
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FINANCE Trends
NEW LOAN ORIGINATION Commercial Lending Through Banks, Thrifts, Credit Unions
Banks, thrifts and credit unions nationally have struggled with credit quality issues over the past few years, though lenders in the Greater Baton Rouge area have not experienced the levels of problems experienced elsewhere, and regulatory constraints diminished the appetite of these lenders for real estate until the problems could be addressed. Credit quality and capital levels have improved in most areas now which, in concert with an increased focus on profitability, is creating increased budgets for real estate loans which will lead to increased competition for quality borrowers and their projects.
Residential Lending
Origination volumes are expected to decline in 2013, though the majority of the reduction comes from a slowdown in the pace of refinancing. The Mortgage Bankers Association projects an increase in the level of purchase money financing in 2013.
Conduit Lending
Commercial Mortgage Backed Securities or CMBS loans through conduit lenders are staging a comeback with 2012 origination volumes exceeding analyst predictions. At the beginning of the year, best guesses were for $38 billion in CMBS origination, but the year ended with $48.4 billion in new loans and good momentum in the fourth quarter. Projections for 2013 are $65 billion in originations with pricing improving. Major players are returning to the market with most loan programs starting at $5,000,000 but some going as low as $1,000,000. Borrowers who are experienced with conduit financing will find changes in the requirements of the resurgent market. For larger and more complex deals there will be requirements for independent directors, pre-prepared notices to tenants to make direct payments to lenders in the case of default and larger legal bills.
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FINANCE Trends
Borrowers who are experienced with conduit financing will find changes in the requirements of the resurgent market. For larger and more complex deals there will be requirements for independent directors, pre-prepared notices to tenants to make direct payments to lenders in the case of default and larger legal bills. Quarterly Issuance of CMBS and CDOs Third Quarter 2012 ($billions)
comeback with 2012 origination volumes exceeding analyst predictions. At the beginning of the year, best guesses were for $38 billion in CMBS origination, but the year ended with $48.4 billion in new loans and good momentum in the fourth quarter. Projections for 2013 are $65 billion in originations with pricing improving. Major players are returning to the market with most loan programs starting at $5,000,000 but some going as low as $1,000,000.
60 2
FINANCE Trends
Staying Strong... Building Stronger! Stronger
and multifamily mortgage debt outstanding increased by $21.8 billion, or 0.9 percent, in the fourth quarter of 2012, as all four major investor groups increased their holdings, according to the Mortgage Bankers Association (MBA). On a year-over-year basis, the amount of mortgage debt outstanding at the end of 2012 was $29.7 billion higher than at the end of 2011, an increase of 1.2 percent. Multifamily mortgage debt outstanding rose to $846 billion, an increase of $11.8 billion or 1.4 percent from the third quarter, and $35.7 billion or 4.4 percent from the fourth quarter of 2011.
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FINANCE Trends
Quarterly Commercial Mortgage Commitments by Life Insurance Companies Third Quarter 2012 ($billions)
Life Insurance Companies continue to increase their allocations to Commercial Real Estate throughout the country and in particular South Louisiana. Throughout the market downturn of 2007-2010, commercial real estate in the New Orleans/Baton Rouge market held up much better than other major cities across the country. Delinquency rates were significantly lower than the national average and Chief Investment Officers of Life Insurance Companies took notice of this trend, becoming more comfortable lending in south Louisiana. The level of commercial and multifamily mortgage debt outstanding increased by $21.8 billion, or 0.9 percent, in the fourth quarter of 2012, as all four major investor groups increased their holdings, according to the Mortgage Bankers Association (MBA). On a year-over-year basis, the amount of mortgage debt outstanding at the end of 2012 was $29.7 billion higher than at the end of 2011, an increase of 1.2 percent. Multifamily mortgage debt outstanding rose to $846 billion, an increase of $11.8 billion or 1.4 percent from the third quarter, and $35.7 billion or 4.4 percent from the fourth quarter of 2011.
62 2
FINANCE Trends
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Construction financing through the HUD 221(d)4 program has had the distinct advantages over all other forms of financing of having relatively low equity requirements, low fixed rates and extended terms up to 42 years, all on a non-recourse basis. Changes in the last year increased the equity requirement, though still less than what most banks would require. The challenge in 2013 will be the availability of financing under the program since HUD has a strict policy of not guaranteeing loans for new projects to be constructed in an area already served by a project with HUD-guaranteed financing. With so many projects having been financed over the years, some developers might find it difficult to site a project that does not impact a HUD-guaranteed loan, causing the developers to opt for full-recourse bank financing with higher equity requirements followed by a permanent takeout at interest rates to be determined in the future.
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FINANCE Trends
INTEREST RATE UPDATE
Floating Rate Indexes - The Prime Rate remained at 3.25% where it has been since the beginning of 2009. The driving factor for the Prime Rate is the federal funds rate which has remained near zero over the same period. The Federal Reserve through the Federal Open Market Committee has stated an opinion that the federal funds rate would be held at current levels until at least 2015. Increasing the rate would key on the reduction of unemployment to 6.50% or lower, at which time the rate would be increased but still held below its expected longer-run value. 30-day LIBOR, which also tracks with the Prime Rate and federal funds, has also hovered near zero since the beginning of 2013. With the European economy in a challenging mode at present, it is likely that there will be no changes to LIBOR in the near future.
Average Monthly Prime, Fed Funds and 30-Day LIBOR Rates January 2006 through February 2013
9 8 7 6 5 4 3 2 1 0 Jan06 May06 Jan07 May07 Jan08 May08 Sep06 Jan09 May09 Sep07 Jan10 May10 Sep08 Jan11 May11 Sep09 Jan12 May12 Sep10 Sep11 Sep12 Jan13 Prime FedFunds 30DayLIBOR
In their most recent Economic Forecast, the Mortgage Bankers Association projected
In their most recent Economic Forecast, the Mortgage Bankers Association projected flat results 64 2 for all indices through the end of 2013.
FINANCE Trends
Staying Strong... Building Stronger! Stronger
Long Term Fixed Rate Index
The benchmark 10-Year Treasury rate was 1.97% in February 2012 and bounced around during the year, ending at 1.97% by February 2013. The rates are being held low by additional activities by the Federal Reserve known as quantitative easing where
Long of Term Fixed Rate Index The benchmark 10-Year Treasury rate was 1.97% billions dollars of longer-term government securities are purchased each month by in February
the Federal Reserve, causing the prices of the to rise and the yields toquantitative decline. being held low by additional activities bysecurities the Federal Reserve known as easing
2012 and bounced around during the year, ending at 1.97% by February 2013. The rates are
where billions of dollars of longer-term securities are purchased each month by the The Mortgage Bankers Association projects government an increase to 2.40% by the end of 2013 and
2.60% by theBankers end of 2014. present, it is likely thereto will be no changes Mortgage Association projects an that increase 2.40% by the endto ofLIBOR 2013 in and 2.60% by the near future.
Federal Reserve, causing the prices of the securities to rise and the yields to decline. The the end of 2014.
10-Year Constant Maturity Treasury Rates January 2006 through February 2013
5.5 5 4.5 4 3.5 3 2.5 2 1.5 1 Jan06 May06 Sep06 Jan07 May07 Sep07 Jan08 May08 Sep08 Jan09 May09 Sep09 Jan10 May10 Sep10 Jan11 May11 Sep11 Jan12 May12 Sep12 Jan13 1.97 1.98 3.69 3.58
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LENDER UPDATE
RealtyRates.com 1st Quarter 2013 Investor Survey of permanent lenders shows the following preferences of property types (as of the fourth quarter of 2012):
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FINANCE Trends
LENDER UPDATE RealtyRates.com 1st Quarter 2013 Investor Survey of permanent lenders shows the following preferences of property types (as of the fourth quarter of 2012):
Source: RealtyRates.com
APPROVED
MELISSA REYNOLDS / Mortgage Lender, Baton Rouge CONNIE BOLEN / Commercial Lender, Baton Rouge
EVERY DAY
Find a branch nearest you.
See Melissa or Connie for your personal real estate or commercial needs. Stop by 5302 Corporate Boulevard in Baton Rouge today.
FINANCE Trends
Staying Strong... Building Stronger! Stronger
The RealtyRates.com survey indicates permanent loan pricing as follows as of the fourth quarter of 2012: survey indicates permanent loan pricing as follows as of the fourth quarter The RealtyRates.com of 2012:
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Source: RealtyRates.com
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Mortgage loans
Baton Rouge
CHRISTOPHER HUGHES | 225-791-4162
Baton Rouge
HOLLY LEBLANC | 225-749-3607
Zachary
LYNDRA LEA | 225-677-7332
Walker
CRAIG COLEMAN | 225-664-1314
Baton Rouge
JESSIE CLARK | 225-248-7925
Prairieville
Denham Springs
Baton Rouge
FINANCE Trends
RESIDENTIAL MORTGAGE LENDING Residential mortgage rates in all categories declined to historic lows in 2012 though have come up marginally in the first quarter of 2013. The Mortgage Bankers Association projects the 30year fixed rate mortgage rate to increase by 50 basis points by the end of the year but also projects an increase in purchase money originations over the next several years. National Average Mortgage Rates: Historical Data February 1992 through February 2013
Reproduced with the permission of Mortgage-X.com
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Source: Federal Home Loan Mortgage Corporation's Weekly Primary Mortgage Market Survey (PMMS),Weekly Average Values.
Freddie Mac 30-Year Fixed Rate Mortgage January 2000 through February 2013
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residential Trends
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EXECUTIVE SUMMARY
Residential Markets in most sectors showed increases in sales volume. Total sales volume for the Greater Baton Rouge Multiple listing area increased over 15% from 2012/2013 after increasing only 3.91% the previous year. The 15% increase is the highest since post Hurricane Katrina. The average sale price remained stable increasing only 1.02% after decreasing by 2.18% the previous year. Total inventory decreased by 8.57% over the previous year and the total month inventory decreased by almost 20%. The same trend took place in East Baton Rouge, Ascension, and Livingston.
Another interesting trend was found in the new home market. Starter homes that ranged in price from $100,000 to $225,000 were flat over last year decreasing by 0.74%, after falling in volume the year before by 3.06%. New homes in the $225,000 to $300,000 price range showed and increase in sales volume of 22.94%, after rising the year before 7.44%. The largest increase in volume was in the new home market priced between $300,000 and $400,000 which rose by 36.99% after increasing by 14.06% over the year before. The starter home market still surpasses the other categories in total number of sales. Last year there were 1068 sales in the $100,000 to $225,000 category. The $300,000 to $400,000 category, which showed the largest percentage increase, had a total of 100 sales.
Market Overview
The data studied includes all sales reported to the Greater Baton Rouge Multiple Listing Service which includes East Baton Rouge, West Baton Rouge, Livingston, Ascension, Iberville, Pointe Coupee, East Feliciana and West Feliciana Parishes. Last
residential Trends
Staying Strong... Building Stronger! Stronger
2013 RESIDENTIAL TRENDS COMMITTEE year there were over 1.48 billion sales reported to the Greater Baton Rouge Multiple Listing Service by a membership of over 2,600 agents. This study applies to market data analyzed from March 16, 2004 to February 16, 2013. All data was analyzed on a 12-month basis from March 16th to February 16th. Therefore, when the year 2011 is referenced below, it means March 16, 2011 to February 16, 2012, and when the year 2012 is referenced it refers to March 16, 2012 to February 16, 2013. Tom Cook, MAI Speaker, Trends David Wade Marie Wade DON STERN Cook, Moore & Associates
An analysis of data taken from the Greater Baton Rouge Multiple Listing Service from 2012 to 2013 indicated that from March of 2012 to February of 2013, there were a total of 7,693 sales. This was up from 6,742 sales in the previous year but down from the high of 11,826 sales in 2005. Total sales volume rose to about $1.484 billion from about $1.284 billion the previous year. This represents a gain of 14.11% in total sales, and a rise of 15.55% in the total sales volume. However, average list prices rose from $196.980 in 2011 to $198,997 in 2012. This represents an increase in list prices of 1.02% from 2011 to 2012. Average sale prices rose from $190,452 in 2011 to $192,862 during the same time period. The increase in sale price represents 1.27%. The average days on market (DOM) rose from 104 in 2011 to 123 in 2012, or 18.27%. The months of inventory decreased to 6.85 in 2012 vs 8.55 in 2011, representing a 19.88% decrease. In summary, the entire market experienced an increase in volume both in number of sales and total dollar volume. There were some slight increases in sale price and increases in the time it took to sell a home, even with total inventory decreasing .
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residential Trends
The following grid demonstrates changes from 2004 to 2013.
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 8,829 11,826 10,761 9,316 7,093 6,878 6,341 6,742 7,693 33.94% -9.01% -13.43% -23.86% -3.03% -7.81% 6.32% 14.11% % Change Total Sales $ Volume $1,290,699,582 $1,969,387,901 $2,033,258,350 $1,836,278,393 $1,430,661,986 $1,313,225,284 $1,235,680,205 $1,284,029,425 $1,483,695,016 52.58% 3.24% -9.69% -22.09% -8.21% -5.90% 3.91% 15.55% % Change Average List Price $149,288 $169,545 $192,408 $201,627 $207,434 $196,876 $201,364 $196,980 13.57% 13.48% 4.79% 2.88% -5.09% 2.28% -2.18% % Change Average % Average DOM 84 77 65 145 95 94 90 104 123 -8.33% -15.58% 123.08% -34.48% -1.05% -4.26% 15.56% % Current % Months Inventory 5.12 7.88% -9.79% 34.23% 0.06% -13.25% 11.63% 0.78% -8.57% 6.85 4.12 4.09 6.34 8.33 7.45 9.03 8.55 -19.53% -0.73% 55.01% 31.39% -10.56% 21.21% -5.32% -19.88% % Change Sale Price Change $146,188 $166,530 13.91% $188,946 13.46% $197,110 $201,700 4.32% 2.33% Change Inventory Change 3,770 4,067 3,669 4,925 4,928 4,275 4,772 4,809
$198,997 1.02%
18.27% 4,397
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residential Trends
The grid below reflects market data for East Baton Rouge Parish from March 16, 2004 to February 16, 2013.
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 5,498 7,121 6,404 5,547 4,299 3,928 3,514 3,645 4,264 29.52% -10.07% -13.38% -22.50% -8.63% -10.54% 3.73% 16.98% % Change Total Sales $ Volume $817,363,785 $1,208,001,107 $1,210,603,571 $1,106,992,598 $905,193,107 $775,286,555 $717,630,533 $735,068,059 $862,050,249 47.79% 0.22% -8.56% -18.23% -14.35% -7.44% 2.43% 17.27% % Change Average List Price $152,113 $172,938 $192,874 $204,532 $216,757 $204,409 $211,855 $209,336 $209,438 13.69% 11.53% 6.04% 5.98% -5.70% 3.64% -1.19% 0.05% % Change Average % Average DOM 77 70 62 70 89 93 85 104 97 -9.09% -11.43% 12.90% 27.14% 4.49% -8.60% 22.35% -6.73% % Current % Months % Sale Price Change $148,665 $169,639 14.11% $189,038 11.44% $199,566 $210,558 5.57% 5.51% Change Inventory Change Inventory Change 1,987 2,221 2,132 2,731 2,762 2,385 2,594 2,705 2,513 11.78% -4.01% 28.10% 1.14% -13.65% 8.76% 4.28% -7.10% 4.33 3.74 4 5.91 7.71 7.28 8.85 8.9 7.07 -13.63% 6.95% 47.75% 30.46% -5.58% 21.57% 0.56% -20.56%
Ascension Parish
The parish of Ascension also experienced a rise in total number of sales and in dollar volume. Both categories increased by 8.27% and 8.75% respectively, after increasing by 9.55% and 7.88% the previous year. List prices and sale prices remained almost flat in Ascension with less than a 1% increase. Days on market decreased by 3.06% in 2012 to 95 from 98 the year before. Current inventory fell by 18.52% from 756 homes available for sale in 2011 to 616 in 2012.
It is also interesting to note that in 2006, after Hurricane Katrina, there were 2,017 sales, so the drop in sales volume from 2006 to 2012 was 33%. Prior to the storm in 2004, there were 1,478 homes sold in Ascension Parish, and in 2012 there were 1,453 homes sold, so the sales volume has almost reached pre-Katrina levels.
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residential Trends
Staying Strong... Building Stronger! Stronger
The grid below reflects market data for Ascension Parish from March 16, 2004 to February 16, 2013.
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 1,478 2,173 2,017 1,582 1,208 1,291 1,225 1,342 1,453 47.02% -7.18% -21.57% -23.64% 6.87% -5.11% 9.55% 8.27% % Change Total Sales $ Volume $243,736,913 $406,712,030 $433,309,000 $355,204,922 $257,911,924 $261,866,502 $248,666,451 $268,271,085 $291,753,619 66.87% 6.54% -18.03% -27.39% 1.53% -5.04% 7.88% 8.75% % Change Average List Price $166,564 $188,750 $216,927 $227,549 $218,626 $207,339 $207,636 $204,595 $204,748 13.32% 14.93% 4.90% -3.92% -5.16% 0.14% -1.46% 0.07% % Average % Average DOM 93 13.50% 14.78% 4.52% -4.91% -4.99% 0.08% -1.52% 0.45% 83 64 84 96 95 89 98 95 -10.75% -22.89% 31.25% 14.29% -1.04% -6.32% 10.11% -3.06% % Change Current Inventory 760 715 646 858 899 738 802 756 616 -5.92% -9.65% 32.82% 4.78% -17.91% 8.67% -5.74% -18.52% % Change Months Inventory 6.17 3.95 3.84 6.54 8.99 6.85 7.85 6.76 5.08 -35.98% -2.78% 70.31% 37.46% -23.80% 14.60% -13.89% -24.85% % Change Change Sale Price Change $164,909 $187,166 $214,828 $224,529 $213,503 $202,840 $202,993 $199,903 $200,793
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Livingston Parish
Livingston Parish typically has been the parish where more affordable housing exist. The average sale price in Livingston Parish in 2012 was $154,042, as compared to the average sale price in East Baton Rouge Parish of $202,169, and Ascension Parish of $200,793.
Livingston Parish exhibited some of the slowest market conditions within the Greater Baton Rouge area from 2007 to 2008 but seemed to have rebounded somewhat from 2008 to 2009. In 2008, there were 1,134 sales that took place. By 2009 that number had increased to 1,241, an increase of 9.44%, after falling by 26.46 % the year before, but market conditions slowed again in 2010. Total sales dropped from 1,241 in 2009 to 1,092 in 2010, or about 12%. In 2011, the number of sales had increased to 1,141, and
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residential Trends
was up 4.49%. Total sales have risen in 2012 to 1,253, or 9.82% . Dollar volume rose by 11.82% in 2012, after dropping in 2011 by 0.97% , while list prices and sale prices both rose in 2012. The average days on market went from 102 in 2011 to 100 in 2012, a decrease of over 1.82%. Inventory decreased by 10.56% from 824 homes available for sale in 2011 to 737 homes available in 2012. The total month inventory decreased by 18.59% over the same period. The recovery that appeared to be taking place in Livingston has slowed, and even though it appears to be recovering from the overbuilding it experienced after Hurricane Katrina, the parish has still not reached the sales volume it produced prior to the storm. In 2004, there were 1,346 homes sold in Livingston Parish, and in 2012 the sales volume was 1,253. The total number of sales had risen to a high of 1,826 after Hurricane Katrina.
The grid below reflects market data for Livingston Parish from March 16, 2004 to February 16, 2012.
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 1,346 1,826 1,624 1,542 1,134 1,241 1,092 1,141 1,253
% Change
% Change
Average
% Change
Average DOM 87
% Change
% Change
% Change
Change Sale Price $122,869 13.51% 15.46% 2.63% 1.45% -3.18% -0.77% -4.57% 1.32% $139,282 $160,794 $164,662 $166,057 $161,362 $159,628 $151,283 $154,042
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225.769.1500
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residential Trends
New Home Sales
Also analyzed were new home sales in the Greater Baton Rouge market. New home sales were analyzed based upon sale prices. The new home market was subdivided into homes ranging in price from; $100,000 to $225,000, $225,000 to $300,000, $300,000 to $400,000, and $400,000 and up. Homes in the $300,000 to $400,000 category did significantly better than the rest of the market, considering increases in volume and price, as compared to last year.
New Home Sales $100,000 to $225,000 Greater Baton Rouge MLS Area
The lower price range, or starter home, market seems to have stabilized. In 2011, there were 1,076 sales that took place from $100,000 to $225,000. In 2012, that number had fallen to 1,068, or about 0.74%. The increase was flat from 2010 to 2011 at -3.06%. List prices and sale prices were mostly flat with both increasing at 1.39% and 1.73% respectively. In 2011, the average list price was for a home in this category was $172,350, while the average list price in 2012 was $174,742, an increase of 1.39%. Sale prices rose in this category by 1.73%. The average days on market showed no change at 110. Current inventory decreased to 434 from 539, or about 19.48%. Months of inventory fell to 4.87 from 6.01, or about 18.97%. A grid representing changes from March of 2004 to February of 2013 in the $100,000 to $225,000 price range follows:
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 1,567 2,219 2,060 1,410 879 1,071 1,110 1,076 1,068 41.61% -7.17% % Change Total Sales $ Volume $241,321,829 $359,290,086 $351,065,021 48.88% -2.29% -30.23% -37.50% 18.00% 2.73% -0.58% 0.97% % Change Average List Price $153,828 $161,581 $170,480 $174,118 $176,147 $169,493 $167,637 $172,350 $174,742 5.04% 5.51% 2.13% 1.17% -3.78% -1.10% 2.81% 1.39% % Average % Average DOM 97 5.14% 5.25% 1.93% 0.26% -3.16% -0.88% 2.56% 1.73% 103 94 99 144 119 91 110 110 6.19% -8.74% 5.32% 45.45% -17.36% -23.53% 20.88% 0.00% % Current % Months % Change
Change Sale Price Change $154,002 $161,915 $170,419 $173,708 $174,158 $168,659 $167,179 $171,462 $174,426
Change Inventory 724 872 849 1,026 758 528 586 539 434
Change Inventory 5.54 20.44% -2.64% 20.85% -26.12% -30.34% 10.98% -8.02% -19.48% 4.71 4.94 8.73 10.34 5.91 6.33 6.01 4.87
-31.55% $244,929,451 -37.66% $153,085,337 21.84% 3.64% -3.06% -0.74% $180,634,221 $185,569,011 $184,493,569 $186,287,439
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GLOBAL REACH
residential Trends
New Home Sales $225,000 to $300,000 Greater Baton Rouge
New homes, in the mid price range, in the Greater Baton Rouge MLS area rose significantly over last year. In 2011 there were 231 sales in this price range and that number rose in 2012 to 284, representing a rise of 22.94%. Dollar volume rose 24.22% also. Prices in this category were stable, increasing less than 1.5%. Inventory dropped by over 11% in 2011 but rose by 13.95% in 2012. It is interesting that in 2012, there were 147 homes available, and in 2010 there were 145 homes available, so the inventory appears to be somewhat stable. The months inventory decreased by 7.31%. It appears that even with increase volume, sales prices are holding and the inventory is stable. A grid representing changes from March of 2004 to February of 2013 in the $225,000 to $300,000 price range follows:
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 332 456 616 555 365 348 215 231 284
% Change
% Change
% Change
% Change
% Change
% Change
% Change
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residential Trends
Staying Strong... Building Stronger! Stronger
2012 by 36.99%. The largest increase in new home volume was in this category. Total sales dollar volume rose over last year by 38.33%. Post Katrina, there were 316 sales in this category, but prior to the storm there were 94 sales. In 2012, there were 100 sales, so this category is back to pre-Katrina volume, but it is still 68% below the high point post-Katrina. Average sale prices are stable with less than a 1% change in this category. Inventory decreased by 6.58%. Months inventory declined by nearly 32%. A grid representing changes from March of 2004 to February of 2013 in the $300,000 to $400,000 price range follows:
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 94 205 316 252 158 90 64 73 100
% Change
% Change
% Change
% Change
% Change
Current Inventory 57
% Change
% Change
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118.09% $69,223,193 54.15% $108,119,310 -20.25% -37.30% -43.04% -28.89% 14.06% 36.99% $86,132,747 $54,802,832 $30,763,182 $21,978,309 $24,683,359 $34,145,394
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residential Trends
A grid representing changes from March of 2004 to February of 2013 in the $400,000 and above price range follows:
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 53 115 119 156 213 80 48 45 56 116.98% 3.48% 31.09% 36.54% -62.44% -40.00% -6.25% 24.44% % Change Total Sales $ Volume $28,887,317 $68,086,016 $70,765,574 $92,870,730 $123,759,396 $46,446,627 $30,261,118 $27,737,662 $31,239,450 135.70% 3.94% 31.24% 33.26% -62.47% -34.85% -8.34% 12.62% % Change Average List Price $542,385 $595,572 $595,855 $597,691 $590,107 $617,938 $654,063 $636,949 $568,295 9.81% 0.05% 0.31% -1.27% 4.72% 5.85% -2.62% -10.78% % Change Average Sale Price $545,043 $592,052 $594,668 $595,325 $581,030 $580,582 $630,439 $616,392 $557,847 8.62% 0.44% 0.11% -2.40% -0.08% 8.59% -2.23% -9.50% % Change Average DOM 138 142 123 149 170 222 217 128 141 2.90% -13.38% 21.14% 14.09% 30.59% -2.25% -41.01% 10.16% % Change Current Inventory 55 84 138 286 260 184 91 62 65 52.73% 64.29% 107.25% -9.09% -29.23% -50.54% -31.87% 4.84% % Change Months Inventory 12.45 8.76 13.91 22 14.64 27.6 22.75 16.53 13.92 -29.64% 58.79% 58.16% -33.45% 88.52% -17.57% -27.34% -15.79% % Change
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residential Trends
by 22.62% from 2009 to 2011 from 650 to 503, after falling by 25.46% from 2008 to 2009 (872 to 650). Sales fell only 3.18% from 2010 to 2011, and then rose in 2012 to 583 sales, an increase of 19.71%. The average days on market increased from 150 to 171, or a decrease in marketing time of about 14%. Current inventory was reduced by 9.95% in 2012, after falling 5.16% in 2011. The average total month inventory fell by 24.81% from 15.84 months to 11.91 months. A grid representing changes from March of 2004 to February of 2012 in the Condominium/Townhouse Market housing market follows:
Total Number Year 3/2004 to 2/2005 3/2005 to 2/2006 3/2006 to 2/2007 3/2007 to 2/2008 3/2008 to 2/2009 3/2009 to 2/2010 3/2010 to 2/2011 3/2011 to 2/2012 3/2012 to 2/2013 Of Sales 685 1,248 1,330 1,245 872 650 503 487 583
% Change
% Change
% Change
% Change
Average DOM 80
% Change
% Change
% Change
Conclusions
The residential market appears to have increased rather substantially in 2012. Volume is up by 15% and prices are flat, or increasing, only slightly. Prices are not dropping significantly in any one category, but are not increasing dramatically either. Inventories are decreasing in most categories, as is the required time to sell a home. Low interest rates have fueled the stabilization, and lenders appear to have a greater appetite for new loans. Market conditions appear to be stabilizing and should continue into 2013.
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CHAIRMAN Trends
Staying Strong... Building Stronger! Stronger
Thank you for your participation in the 2013 TRENDS in Real Estate Seminar. I would like to personally thank you for being here and provide a bit of this events history and what goes into making it happen every year.
Branden Barker
CCIM , CPM NAI Latter & Blum, Inc.
DEVELOPING TRENDS
The goal of the TRENDS program is to educate CID members and their clients, as well as other real estate practitioners, in the Greater Baton Rouge area about the current trends in the market, and to offer our opinion of forecasted market trends. Six distinct market sectors of commercial real estate are covered at TRENDS: finance, industrial, office, multifamily, residential, and retail. These presentations represent the combined efforts of volunteer committee members who pool their resources, data and expertise in analyzing each sector. Each TRENDS presentation is the product of hard work and extensive evaluation by market experts. The TRENDS Committee is a dedicated group of volunteers that works diligently all year long in preparation for the TRENDS Seminar. My sincere thanks goes to each of the committee members, presenters, sponsors, advertisers and GBRAR staff as well as to the LSU Real Estate Department for making this years program another success. The current CID President, Mr. Deane Bryson will be the Chairman of the Trends in Real Estate Seminar in 2014. We are looking forward to another great year! Thank you again for your continued support of the CID and the TRENDS Seminar and I look forward to seeing you at next years seminar. Sincerely,
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SPECIAL THANKS 20
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The Baton Rouge Commercial Investment Division would like to thank the following people for their help with preparations for this publication and all the information that went in it. Trends Leadership: Branden Barker, Chairman, Brian Andrews, Gary Black, Deane Bryson, Tom Cook, Ken Damann, Herb Gomez, Scot Guidry, Sean McDonald, D. Wesley Moore, Branon Pesnell, Kelley Pace, Todd Pevey, Carlos Slawson, Jonann Stutzman, Dottie Tarleton, and Jonathan Walker. Special thanks go to all the individuals that worked on the executive reports Jill Boss of Boss Solutions, LLC., Xact Business Solutions, along with the Greater Baton Rouge Associations of REALTORS (Everyone at the office)
and Wren Aerial Photography. Thank you to Julio Melara of The Business Report for taking time to be our Master of Ceremonies. A very special thanks to Mrs. Jill Sylvest, who worked very hard to get all our sponsors and advertisers. We would like to thank Britton & Koontz Bank for coffee, Gulf Coast Bank & Trust Company for beverages, JTS Management for breakfast and goodies, and Baton Rouge Coca-Cola for advertising banner. Finally, we want to thank all of our Sponsors and Advertisers. Without your support, this event would not be possible.
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