NEW ORLEANS, LA - The scrum for undamaged rental apartments that drove up rental prices after Hurricane Katrina appears to have calmed, but greater New Orleans is no longer the oasis of affordability that it was before the storm, according to a survey issued this week by a Metairie real estate broker. The report, by Larry G. Schedler & Associates, documented what has been apparent to aggrieved renters for two years, the storm socked landlords with higher insurance costs and other expenses, helping to push up rental rates by 20 to 30 percent overnight. Such an increase normally would have evolved over a decade.
The survey focused only on large apartment communities, not on the doubles common in the historic heart of the city. While rents in such buildings have reached equilibrium, Schedler says many tenants still have to compromise about the neighborhood they live in or the number of amenities they can afford. "The affordability is not there for some people," he said. "If the rent goes up and someone's salary hasn't gone up proportionally, the renter faces having to get a one-bedroom instead of a two-bedroom."
At the same time rents have ballooned, Schedler said the quality of rental housing has improved. When the storm inundated thousands of apartments, it forced landlords to renovate buildings that in many cases were 20 to 30 years old and showing their age. "Virtually every community has received a 'face lift,' and the effective age of most properties has been reduced," the report says.
Apartment buildings in the historic center of New Orleans commanded the highest average rents in the metro area, roughly $1,300 per unit. Those buildings were 96 percent full, indicating that the rental market remains tight almost three years after the storm. St. Tammany dominated the suburban market, with landlords there charging an average of $973 per unit.
Eight new apartment developments with a total of 1,775 units are currently under construction in the region, according to a section of the report by J. Mark Madderra of the Metairie firm Madderra & Cazalot. All but two of those were under way when a previous edition of the survey was released last summer. Turmoil in the financial markets, which has made credit more expensive and pushed banks to tighten their underwriting standards, has helped retard the pace of new construction, according to the survey.
Schedler highlighted two areas of the city as centers of apartment activity, devastated eastern New Orleans and the Tulane Avenue corridor in Mid-City. Out east, developers have renovated roughly 4,000 apartments, or 57 percent of the pre-storm inventory.
Donald Denham, manager of apartment development at the Mitchell Company of Alabama, said his company succeeded repairing the Huntington Park complex out east and selling it fully leased to investors from California at the end of last year. His company is now rehabbing Hidden Lake, a 442-unit community just off Interstate 10, and has a letter of intent from another investor interested in buying it.
He said demand for apartments in eastern New Orleans is strong, but his firm has found it difficult at times to cull tenants with strong credit and sufficient incomes. "We had no shortage of applicants, but our biggest challenge was getting qualified tenants. There was no shortage of applicants," Denham said. "If they had some problems during Katrina and that was the source of their credit problem, we didn't hold that against them."
Before the storm, Tulane Avenue was a corridor of bail bonds shops and slatternly motels. Since the storm, two young developers, both graduates of Tulane University, have launched several new apartment buildings in the area that Schedler believes augur an era of increasing density near downtown.
"This was a central city location tha
Source: NOLA.com