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How Is Baton Rouge’s Apartment Market Weathering Historic Flooding?

How Is Baton Rouge’s Apartment Market Weathering Historic Flooding?

Historic flooding in the Baton Rouge area has forced thousands of displaced Louisianans to seek alternative housing solutions – especially apartments. But it’s too early to tell the degree to which it has impacted the usually steady apartment market.

The estimated number of flood-damaged homes has increased to 155,000, said Tucker Barry, spokesman for the Louisiana governor’s office. Though it is unclear how many of those are apartments, the number is likely significant. A total of 28.5% of homes in flood areas are rentals, according to the Baton Rouge Area Chamber.

Damage in East Baton Rouge Parish accounts for an estimated 58,664 of affected housing structures, a figure that equates to more than 40% of the parish’s residences, according to the parish website. Similar data in the Baton Rouge metro’s other eight parishes, including the hard-hit Livingston Parish, was not available.

Renter-occupied units comprise 39.7% of homes in flood areas in East Baton Rouge, according to the chamber. In Livingston, 17.2% of flood-area homes are rental units.

Damage estimates, composed of estimates from individual parishes, are likely to grow, Barry said. A forecast of how many people will temporarily or permanently journey outside of the market is not yet clear. But Barry said many residents have been able to remain local.

“Unlike (Hurricane) Katrina, this weather event hasn’t resulted in any sort of mass exodus,” he said, adding New Orleans faced standing-water challenges because of the broken levee. “It is safe to say that most people have found a place to stay either on their own or through an available program to stay while they repair and rebuild.”

Such programs include hotel and rental assistance offered by FEMA. The apartment market does appear to be absorbing some displaced residents. Early data from MPF Research’s 3rd quarter 2016 apartment survey indicates that occupancy has risen slightly from the 2nd quarter 2016 rate of 94.2%. Increased apartment occupancy typically follows such significant weather events, as damaged apartment units are taken offline, displaced residents seek rental housing and apartment operators discount rents for victims.

“Apartment owners and operators place the immediate focus on getting folks housed, rather than on maximizing their own profitability,” said Greg Willett, RealPage chief economist.

Early data also shows increased rent concessions. Federally funded shelter support is also anticipated to impact the market, as rental assistance is the most common method of financial aid for provisional accommodations.

Rental housing multifamily market

Meanwhile, the flooding event has threatened to halt development for apartment properties under way in the two heaviest flooded submarkets. North Baton Rouge and Eastern Baton Rouge contain 696 in-progress units. Another 213 units are under construction just blocks away. Construction on these communities could endure delays of at least six months.

But that delay could increase, along with the number of damaged homes and displaced residents. Weather forecasts call for thunderstorms throughout much of September. Any additional precipitation would likely intensify the market’s situation, Barry said.

“Rain is a concern now because the ground is saturated,” he said. “A flash rain, which we get really frequently in the summer … can create flash flooding in the area.”

Future developments also face timeline challenges. Across Baton Rouge, at least 2,200 units are in various planning stages. More than 600 of those are located in North Baton Rouge and Eastern Baton Rouge. As played out in similar flooding events, an inability to build could lead to mass deferment and permit-holding.

One particular resource could bring inventory online. The Multi-Family Lease and Repair Program, an effort to restore rundown rental units for the purpose of temporary leasing, would reintroduce properties to the market. Program implementation, FEMA said, is a slow-moving process.

“We are currently looking for larger properties that aren’t being rented out right now because they need repairs,” according to FEMA literature. “FEMA will negotiate with the owner to repair the building in return for agreeing to rent to survivors.”

At the start of September, some properties had indicated interest, but none were participating.

Additional relief resources include the Manufactured Housing Units Program, a mobile-home alternative, and the Shelter at Home Program, in which small repairs are financially covered so homeowners can remain sheltered while rebuilding. Five days into the program, Barry tallied 15,889 Shelter at Home applicants.

Other relief options, like FEMA’s Transitional Shelter Assistance, are relatively short-term. The program, available to a smaller pool of residents, offers direct-pay hotel rooms. Eligible victims, however, are challenged with locating a nearby, partner hotel. Currently, most participating hotels with availability are roughly one hour outside of Baton Rouge. FEMA’s latest data, a Sept. 4 count, showed 2,300 hotel check-ins.

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