MARKET SNAPSHOT: Employment Continues to Grow in New Orleans, Expanding Population and Multifamily Demand
By Philip Shea, Associate Editor
The Big Easy continues to sport strong fundamentals and is becoming an incubator for the leisure and hospitality sector, having added 4,000 new positions in 2012. The local population expanded 1.6 percent during the same time, strengthening demand for both housing sectors and providing developers with a level of confidence that will bring nearly 1,000 new units to the metro by 2014.
In the meantime, vacancies continue to plunge across the MSA, with the overall average falling 90 points to 7.3 percent over the last four quarters. This rate stood at nearly 12 percent in 2009, falling precipitously over the next few years and now expected to hit 6.1% by the end of 2013 and 5.8% the year after.
Such consistent trends in occupancy led to a notable 2 percent rise in asking rents between 2011 and 2012—to $899 per month. Concessions also fell 90 basis points to 3.3 percent of asking rents.
Going forward, strong economic performance is expected to remain the norm as projects such as the expansion of Boomtown Casino and construction of the University Medical Center take shape. Once finished, the new casino will permanently employ around 750 staff members. The new research and teaching hospital comes as a result of legislators approving $1.1 billion in funds.
Overall payrolls are expected to increase by 1 percent, or 5,500 new positions, over the next four quarters.
In tandem with new construction, permitting activity is expected to surge over the next two years, with 1,050 annualized permits expected for 2013 and 1,020 expected in 2014. Even with new deliveries and an expanding pipeline, however, rents will continue to climb 2.4 percent this year to an average of $921 per month.
The best performing submarket in terms of rents continues to be the historic city center with a 2012 average of $1,211 per month, while the River Ridge/East Bank area sported the lowest average vacancy—of 3.9 percent.
The eastern part of the city around the Ninth Ward, however, continues to see extremely high vacancies near 15 percent and rents averaging $713 per month. This part of New Orleans was severely damaged during Hurricane Katrina in 2005.
For more news from New Orleans, click here.Tags: Concessions, employment, market report, rents, Urban, vacancy