Inside the heads of 3 apartment experts

By Deon Roberts, Online Editor

This week, I sat down with three people who are New Orleans metro area apartment experts: Mark Madderra, Larry Schedler and Cheryl Short.

The week before, they had released their fall report about the metro area apartment market. After the report came out, they offered to get together with me to talk more about the market.

Here are my notes:

- Downtown New Orleans apartment rents are high, averaging more than $1 a square foot, even though occupancy has fallen. Apartment owners can command those rents because people are willing to pay them to live in that area. “That’s a product that’s one-of-a-kind,” Short said. Some apartment owners are willing to have lower occupancy rates and keep rents up. Some downtown properties are renting for as much as approximately $2 a square foot.

- There are very few new apartment construction projects being considered for the New Orleans metro area, thanks to the lending crisis affecting the rest of the country, except for projects that have funding from the New Market Tax Credit and historic tax credit programs. So, look for a period of time — no one knows for how long — when the inventory of apartments in the metro area will be flat.

- Plenty affordable housing will pop up in New Orleans, thanks in large part to the redevelopment of the four former housing projects in Orleans Parish, which should be under construction next year. The $600 million redevelopment of those four sites could shift the affordable housing population to those sites, Madderra said. “It’s going to change the dynamics of Orleans Parish,” he said.

- It is a hard market for a buyer who can’t put down at least 30 percent to buy a complex, and properties that are in disrepair are even harder to get financing for.

- The biggest barrier to building new apartments in the metro area is not lack of land, which has long been a challenge. It’s lack of construction financing.

- New Orleans has among the highest percentages of renters — more than 60 percent — out of major U.S. cities. On the North Shore, renters make up about 10 percent of the population. There’s also a large population of elderly renters on the North Shore, because their children living in the metro area want them close by. As the economy struggles, though, some of those elderly renters could move out of apartments and into single-family homes with their children. Also in St. Tammany Parish, there is a large need for work force housing, because many workers can’t afford the rents there.

- Before Katrina, in the metro area there were 48,000 apartments in complexes of at least 100 units apiece. That figure is now at around 40,000.•