(iStock)
Rising inflation, rising interest rates and numerous insurance issues continue to hinder the commercial real estate market in East Baton Rouge Parish.
As of mid-way through 2024, the commercial real estate market is experiencing roughly 38% fewer transactions in volume and 28% fewer deals compared to the same period last year, according to the latest data compiled by Elifin Realty.
Commercial real estate sales transactions in East Baton Rouge Parish decreased 0.59%, with transaction volume over the past 12 months totaling $502.3 million last month.
Speculation is reportedly growing that interest rate cuts are on the way, and Jonathan Walker of Maestri Murrell Real Estate expects the situation to improve as the end of the year approaches.
“I'm in the position that, 'it can't get any worse,'” he says. “I think insurance will improve a little bit, barring another storm. I think interest rates will improve a little bit, if interest rates are lowered. I think inflation will slow a little bit, construction costs will go down a little bit. I don't think the numbers will change much, but the way consumer sentiment is viewed will change. It will be more of a psychological win than a financial win.”
According to data from Elifin Realty, here's how each sector performed:
retail
Retail dollar value was $86.1 million in June, down 2.99% from the previous month. Retail transaction velocity decreased 10.64% and price per square foot increased 3.45%.
Walker said retail and industrial are the two strongest sectors in the market. He said there has been an improving trend in leasing space in shopping centers and subdivisions of shopping centers.
Quick service restaurants, tire shops, oil change facilities and other automotive-related users are buying a significant amount of real estate.
“We continue to sell out parcels to all types of coffee users,” Walker said. “One area of the retail market that's slowed down is car washes. We're not seeing any enquiries from car washes. It seemed like a big boom last year, but it's definitely slowed down.”
office
In the Office sector, sales decreased 0.5%. Trailing 12 month sales were $70.6 million in June compared to $71.0 million in May. In addition to the sales decline, the Office sector experienced a 5.32% decrease in transaction velocity.
Property prices increased 3.88%. The average price per square foot was $152.96 in June, up from $147.25 in May.
housing complex
In the multifamily sector, sales fell 3.21%. Trailing 12-month sales were $201.8 million in June compared to $208.4 million in May. Transaction velocity also fell 5.56%.
Industry and Land
The industrial sector was the only one to record increases in sales, transaction velocity and property values.
Sales increased 1.53% from $53.0 million in May to $53.9 million in June. Transaction velocity increased 1.27% and property values increased 1.45%.
In the land sector, sales volume fell 4.91% from $51.9 million in May to $49.4 million in June. Transaction velocity and property values fell 8.54% and 17.19%, respectively.
overview
Walker said the commercial real estate market has been hit with high interest rates, high insurance costs and high construction costs over the past 24 months, but that has also created other opportunities in the leasing sector.
“Office rents are also up a little bit because new office buildings aren't being built,” Walker said. [goes for] “In retail, we have a supply and demand issue because new retail isn't being built either. There isn't a lot of new supply. So there's a demand for second-generation space. In some cases, new build rents are double what second- or third-generation space is.”
Walker said his company has received inquiries about first-to-market retail concepts that could generate immediate consumer excitement.
“It's going to be interesting to follow this over the next few years,” he said. “Expanding retailers will start in Texas, then move west and east, and start to make inroads in Louisiana. I think the next few years are going to be good, at least in the retail market, because I think the new retailers coming into the market are going to add some excitement to the market.”
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