2014 Multifamily TRENDS

7/22/2019 2014 Multifamily TRENDS

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Baton Rouge Apartment Trends 2014

Presentedby:

Craig A. DavenportCook,Moore&Associates

April10,2014

Assistedby:

D. Wesley Moore, II, MAI, CCIM,SeanMcDonald,AbbyMcMasters,

EliseMoore&AlexisMartin

withCook,

Moore

&

Associates

Real

Estate

Appraisers


2/72

WhatWill

Be

Presented?

FactorsaffectingRentalHousingDemand

TrendsinRents&Vacancies

Recent&PendingConstructionofApartments

WhatsAhead

RecentSales

of

Apartment

Complexes


3/72

EconomicFactors

Jobgrowthdrivespopulationgrowthand,ultimately,thedemandfor

apartments.We

have

returned

to

aperiod

of

economic

growth,

though

some

amountofcautioniswarranted. Recenttrendsandannouncementswarrant

ahealthyamountofoptimism(particularlyonalocallevel).

LorenScott

in

his

2014

2015

Louisiana

Economic

Outlook

projected

that

Baton

Rougewilladd12,500newjobsin2014andanadditional9,200jobsin2015,

foratotalprojectionof21,700newjobsoverthe2yearperiod.

TheBatonRougeAreaChamber(BRAC)projectedthatBatonRougewilladd8,700newjobsin2014andanadditional7,700newjobsin2015,foratotal

projectionof 16,400newjobsoverthe2yearperiod.


4/72

ExcitingEconomic

Factors

Over$23.7Billion(withaB)ofindustrialandcommercialconstructionto

becompleted

over

the

next

23years

has

been

announced

for

the

Baton

Rougearea(plusbillionsmoreinLakeCharlesandotherSouthLouisiana

markets).

Thiswill

initially

produce

ahuge

number

of

construction

related

(often

involvingtemporaryresidents,forwhomapartmentsareneeded)and

designrelated(engineering,etc.)jobs.

Addtothisthe2015arrivaloftheIBMfacilityintheCBDthatwillbringanother800+wellpayingjobs(theystartedhiringin2013),andtheBaton

Rougeareacouldexperiencestrongeconomictimesoverthenextseveral

years.


5/72

MoreEconomic

Factors

January2014jobcounts(mostrecentavailable)fortheBatonRougemetro

areawere

up

11,990

(3.4%)

from

January

2013.

UnemploymentinBatonRougeis4.8%(downfrom7.1%ayearago). Thisis

wellbelowthenationalunemploymentaverageof6.6%andthesouthern

regionalaverage

of

6.2%.

TheunemploymentratefortheStateofLouisianais4.9%.


6/72

PopulationTrends

CensusBureauestimatesindicatethatthepopulationofEastBaton

RougeParishincreased1.0%(4,348people)from2010to2012(most

recentestimateavailable).

Thepopulation

increase

for

EBRP

from

2000

to

2010

(Census

figures)

was

27,319(6.6%).

TheAscensionParishpopulationincreased4.8%(5,092people)from

2010to

2012,

while

Livingston

Parish

grew

by

3.0%

(3,902

people).


7/72

HistoricalApartment

Rental

Trends

Rentalshadhistoricallyincreased1%to3%annuallyfrom1995to2005

Rentalsincreasedroughly10%fromSpring2005toSpring2006,

predominantlyattributabletotheKatrinaEffect

Averagerentsforallunitswereflat(0%increase)fromFall2010toFall2011

Averagerents

for

all

units

increased

an

average

of

2.0%

from

Fall

2011

to

Fall2012


8/72

Apartment

Rental&

Vacancy

Trends

Snapshot

Rentalsforamatchedsampleof126localcomplexesincreased1.72%fromFall2012toFall2013. Thenormin200105was1%to2%increases

annually.

Vacanciesforthis126propertysamplewerereportedat5.6%inFall2013,upslightlyfrom5.4%reportedinFall2012

These indicatorssuggestastrongapartmentmarket.


9/72

RentalUnits

Built

2006

2013

Total

2006-13

Conventional 3,946

Upscale Student 1,218Affordable Housing (LIHTC) 1,723

Total # of Units Built Post-Katrina 6,887

Units per year 861


10/72

RentalUnits

Underway/Planned

2014

2015

Underway Planned Total

Conventional 435 999 1,434

Upscale Student 786 0 786

AffordableHousing

170 144 314

Total 1,391 1,143 2,534


11/72

ApartmentComplexesCompleted2013

6complexes

totaling

573

units

were

completed

in

2013

HighGrove

192upscaleconventionalunitsonPicardyBoulevardbehindMallof

Louisiana

HUD221(d)4financing

Developer:DomainCompanies


12/72

HighGrove

PicardyBoulevardbehindMallofLouisiana


13/72

HighGrove


14/72

HighGrove


15/72

HighGrove


16/72

HighGrove


17/72

HighGrove

PropertyHighlights

3Story

complex

with

interior

corridors

and

elevators

MixedUsedevelopmentwithcommercialspaceonthefirstfloorofthe

frontbuilding

Comprehensiveamenitypackage,includingresidentlounge,cybercaf,

largefitness

center,

gameroom,

resort

style

pool

with

grills

SilverStarLEEDCertified lowerenergycostsforresidents

Solarpanelsforcomplexontopofcarports


18/72

UniversityEdge

WestMcKinleyatIowaStreet


19/72

UniversityEdge

PropertyHighlights

Three4Story

buildings

with

interior

corridors

and

elevators

Studentbasedproperty(bythebedrents)

2,3and4bedroomunits

Extensivecommonareaamenitypackage,includingclubhousewithwifi,

gatedcommunity,largefitnesscenter,gameroom,resortstylepoolwithgrills,computerlabwithfreeprinter,tanningsalon

Fullyfurnishedunits,fullappliancepackage,keyedbedrooms,

washers/dryers

Internetand

Cable

TV

included


20/72

Affordable (LIHTC)Complexes

Completed 2013

LIHTCComplexesCompletedin2013

BeltLine

Townhomes

32Affordableunitsat1833Gayosa Street

Developer:GulfCoastHousingPartnersofNewOrleans

TheCorona(formerOlinde Building)

36Affordableunitsat1854NorthStreet


TheElysian

100MixedIncomeaffordableunitsonSpanishTownRoad



21/72

TheElysian

SpanishTownRoad


22/72

TheElysian


23/72

TheElysian


24/72

TheElysian


25/72

TheElysian


26/72

TheElysian


27/72

TheElysian

PropertyHighlights

Single4Story

building

with

interior

corridors

and

elevators

MixedIncomedevelopmentwithmarketrateunitsandaffordableunits

Extensivecommonareaamenitypackage,includingprivateconference

rooms,largefitnesscenter,playground,movietheatreroom,business

center,screened

porch,

community

garden

area

Upscalefinisheswithwashers/dryers;Someunitshave10ceilings


28/72

BeltLine

Townhomes

1833Gayosa Street


29/72

BeltLine

Townhomes


30/72

BeltLine

Townhomes


31/72

BeltLine

Townhomes


32/72

BeltLine

Townhomes


33/72

BeltLine

Townhomes

PropertyHighlights

Traditional,garden

style,

Townhouse

units

Allareaffordable(LIHTC)2and3Bedroomunits

ShareamenitieswithCoronaApartmentsacrossstreet


34/72

TheCorona

(former

Olinde Building)

1854NorthStreet


35/72

TheCorona


36/72

TheCorona


37/72

TheCorona


38/72

TheCorona


39/72

TheCorona

(former

Olinde Building)

PropertyHighlights

1&

2story

building

with

interior

corridors

Allareaffordable(LIHTC)Efficiencyand1Bedroomunits

Allunitshavewashersanddryers

Commonareaamenitiesincludeacommunityroom,largelobbyarea,

meetingroom,

key

card

access

to

building


40/72

Affordable (LIHTC)Complexes

Completed 2013

LIHTCComplexesCompletedin2013

TheGardens

Senior

Apartments

55AffordableunitsorientedtowardsSeniorsHouseholds

4949HooperRoad

Developer:JayBernstein


41/72

TheGardens

Senior

Apartments

4949HooperRoad


42/72

TheGardens


43/72

TheGardens


44/72

TheGardens

PropertyHighlights

Single2Story

building

with

interior

corridors

and

elevators

Affordable(TaxCredit)unitsorientedtowardsSeniors

Extensivecommonareaamenitypackage,includingtenantlounge,

computerroom,fitnesscenter,library


45/72

Trendsin

New

Baton

Rouge

Construction

5outof6newlyconstructedcomplexeshadmainentryway

withinterior

corridors

and

elevators

Kitchensopentolivingareas(nowastedspace)

Extensivecommonareaamenitypackages

LargeFitnessCenters

LargeTenant

Lounges

and

meeting

areas

Communityorienteddevelopments

Onlinecommunities


46/72

ConventionalComplexes

Under

Construction

UpscaleComplexesUnderConstructionin2014

TheOnyx

28upscaleunitsonThirdStreetatConventionStreet

Developer:CommercialPropertiesDevelopmentCorporation

IBMTower

95upscaleunitsonRiverRoadatMainStreet

Developer:CommercialPropertiesDevelopmentCorporation

TheDistrict

312upscaleunitsonPerkinsRoadnearPollard

Developer:Vintala Partners/Creekstone


47/72

DowntownComplexes


48/72

TheDistrict

Perkins

Road


49/72

TheDistrict

Perkins

Road


50/72

StudentOriented

Complexes

Under

Construction

StudentOrientedComplexesUnderConstructionin2014

Fairfieldat

Baton

Rouge

304studentorientedunitsat449BenHur RoadatBurbankDrive

Developer:FairfieldDevelopmentCorporation

SterlingUniversity

235studentorientedunitsat4194BurbanknearWestParker

BehindSouthgateTowers

Developer:SterlingUniversityHousing/Dinerstein

TheStandard

247studentorientedunitsonWestChimesStreetatLSUNorthGates

Developer:Landmark

Companies


51/72

Fairfield Burbank

at

Ben

Hur


52/72

Fairfield Burbank

at

Ben

Hur


53/72

SterlingUniversity

Burbank


54/72

TheStandard

West

Chimes

at

LSU

North

Gates


55/72

Affordable(LIHTC)

Complexes

Under

Construction

LIHTCComplexesUnderConstructionin2014

WindsorCourtApartments

120affordable(LIHTC)unitsonLAHighway74inSt.Gabriel

UsingCDBGfundsfromParishforDevelopment

Developer:Iberville

Partners

GardensofBatonRouge

50affordable(LIHTC)unitsonPlankRoadsouthofHooperRoad

ScatteredSitecomplex

Developer:GaryHinton


56/72

Gardensof

Baton

Rouge


57/72

ProposedConventional

Complexes

ConventionalComplexesproposedfor201415(Downtown)

Commerce

Building 93upscalemarketrateunitsat333LaurelStreet

Developer:T.J.Iarocci

440onThird(CapitalOnebuilding)

65upscale

market

rate

units

at

440

Third

Street

Developer:DykeNelson

342Lafayette

16upscalemarketrateunitsat342Lafayette

Developer:DykeNelson

Onlyatotalof174unitsinPlanningStages+123unitsatIBMandOnyx=

Totalof297unitsdowntown


58/72

ProposedConventional

Complexes

ConventionalComplexesproposedfor201415

Park

Rowe 334upscalemarketrateunitsinPerkinsRowe

Developer:DavidAlexanderwithVintageRealty

EastBoydApartments

85upscale

market

rate

units

on

East

Boyd

at

Dodson

Road

Developer:Dantin &Bruce

AudubonApartmentHomes

182upscalemarketrateunitsonLAHighway64westofLA964inZachary

Developer:HeritageConstruction

RiverHouse

224upscalemarketrateunitsonNicholsonatIowaStreet

Developer:

Mark

Blumberg


59/72

ProposedComplexes

Planned

(not

underway)

AffordableComplexesproposedfor201415

CypressSpringsElderly

144affordableunitsalongHooperRoad,eastofPlankRoad

DeveloperCDI


60/72

AffordableRehab

Complexes

AffordableRehabsproposedfor201415

Renaissance

Gateway

formerlyArdenwood Park

208affordableunitsonNorthArdenwood

Startedrenovationlastyearwithaplannedcompletiondateof

August2014

Developer:CDI

JaguarPlaza

95student

oriented

and/or

affordable

units

at

750

Harding

Blvd

Fencedoff,buthaventstartedrenovations

Developer:VernonYoung


61/72

Trends

in

New

National

Construction Moreefficient(smaller)units

Energyefficiency

LEEDCertified

with

energy

savings

for

tenants

SolarPowerforcomplex

Moreextensivecommonareaamenitypackages

SplashPads

CoffeeBars

ElectricalhookupsinParkingLotsforautomobiles

Controllable

features

(lights,

tv,

etc.)

from

smartphones PetFriendly(Dog)units

Firstfloorunitsw/Ceramictilefloors

FencedBackyards


62/72

MarketSummary

TheBatonRougemarkethasabsorbedthe6,300+apartmentsand

2,000+condos

built

since

Katrina

hit

(in

August

2005).

It

is

in

the

process

ofabsorbingthe573unitscompletedin2013,with1,391+moreunits

underconstructionand1,143+announced/plannedfor201415(though

somewillpotentiallyremainonhold).

Wedohaveasignificantamountofapartmentsinthepipeline,however,

theBatonRougeareahasbeenabsorbingallofthenewunits.

Ifall

of

the

announced

jobs

do

not

arrive,

we

could

see

higher

vacancy

ratesandlowerrentincreases(withmorespecials)inthefuture.


63/72

MarketSummary

Rentsarestillincreasingandvacancyratesarestilllow(currently5.7%,

whichislowerthanhistoricalnormsof6%to7%).Economicvacancies

arelikely

higher,

but

still

strong.

Rentswilllikelycontinuetorisein2014,whilevacanciesshouldcontinue

tostabilizeat6.0%to7.0%.


64/72

TyGose,

CCIM

NAILATTER&BLUM


65/72

PropertySales

2013

14

# of Units $/SF $/Unit

Jeffersonian Condos

(7950 Jefferson Hwy) 33 $61 $65,450

Live Oak Trace

(7615 Magnolia Beach,

Denham Springs)

264 $58 $60,227

Newport Villas

(1737 La Annie Dr)94 $14 $12,766

Elm Street Senior Apts

(4250 Elm Street)60 $33 $21,000


66/72

PropertySales

2013

14

# of Units $/SF $/Unit

Place Du Plantier

(550 Lee Drive)268 $61 $47,015

Juban Court Condos(8429 Florida Blvd,Denham Springs)

83 $55 $85,542

Bluebonnet Ridge

(10624 Glenstone Ct)112 $69 $61,508

Siegen Village

(6630 Siegen Lane) 312 $60 $67,244

Mansions at Ivy Lake

(14086 Airl ine Hwy)240 $111 $129,512


67/72

Why

Apartments? Consistentlymoststableassetclassofallthepropertytypes

apartmentshavetheleastvolatileswings

Multiplesourcesoffinancing Overhalfoforiginationsin2013were

governmentbacked,mostofwhichhavea30 40yearamortization

Shorttermcontractswithrenterstrackinflationandincomegrowth

Expensesareeasytoforecastandbudget

Everyoneneedsaplacetolive

Very

good

barometer

of

national

economic

health


68/72

DespiteDC,2.5millionjobsaddedin2013and88%ofalllostjobshave

beenregainedsincetherecession. Nethouseholdwealthisatanalltime

high

of

$77

Trillion

GDPisforecastat3%growthandexpectedtoadd2.7Millionjobsin2014

Thisgood

news

means

the

fed,

which

is

already

tapering

its

purchase

of

treasurieswillcontinue,however,thisisanindicationofreturningnormal

creditmarkets

Forecastedinterestrateincreaseswillbecoupledwithsignsof ahealthy

economy,whichwillalsopairwithNOIgrowth

National

Metrics


69/72

Householdformationsexceeded1Millionin2012doublingtheprior5

yearaverage

Individuals1834livingwiththeirparentsisstillclosetoalltimehighs

TheUSabsorbedallofthenewunitsconstructedin2013showingapent

updemand

for

housing

units

estimated

at

33.5

million

nation

wide

Strongerjobandwagegrowthaswellasconfidenceintheresilienceof

the

economy

have

begun

and

will

continue

to

de

bundle

those

households

Housing

Metrics


70/72

Lowernewconstructionnumbersthelast4yearswillallowroomfor

growththenextseveralyearssolongasthenationalandlocaleconomy

remain

stable

Ofthe1,391unitsunderconstruction,only435aremarketrate ofthe

1,143proposed,144areaffordableand999aremarketrate(ofwhich

174are

downtown)

SupplyimbalancesmayemergeincertainpocketsoftheMSAhowever

theywillbeshorttermgiventheunbundlingandpentupdemand

What

This

Means

for

Baton

Rouge


71/72

TheremaybepressureonexistingclassAapartmentownersasnewer

unitshitthemarketwithadditionalamenities

RentgrowthwillbehighestinBandCunitsasdemandgrowswithlittle

newinventoryavailable

Ownersconsidering

selling

will

receive

numerous

offers

as

CAP

rates

are

approachingalltimelowswithlimitedinventory

Develop

or

acquire

assets

that

fit

in

the

Class

B

category

as

a

larger

pool

ofrenterswillfallinthatpricerange

Local

Apartment

Opportunities


72/72

Thanksto.

WesleyMoore,SeanMcDonald,AbbyMcMasters,AlexisMartinandElise

MoorewithCook,Moore&Associates

LauraWhitewithLatter&BlumPropertyManagement

David

Treppendahl &

Deane

Bryson

with

Latter

&

Blum

Realtors

JohnWrenwithWrensAerialPhotography

TheLSU

Real

Estate

Research

Institute

Date post:	09-Feb-2018
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2014 Multifamily TRENDS

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