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Indigo Park is a 330-unit development under construction at Gardere Lane and Nicholson Drive where the rent will run you anywhere from $760 to $1,615 each month. About 30 units are occupied, and about 75 or so have been leased, according to the developer.

“We’re moving in folks as fast as they can finish them,” says Steven DeFrancis of Cortland Partners in Atlanta. Units range from a few efficiency apartments to two stand-alone carriage houses. “We really tried hard to build a neighborhood more than an apartment complex.”

As the Baton Rouge apartment market becomes more competitive, especially on the high end, Indigo Park will be one development to watch. Location is the most important factor in real estate, and Gardere Lane, fairly or not, is synonymous with crime in Baton Rouge with five homicide cases in the area through mid-June.

DeFrancis, however, argues location could be his development’s greatest strength. New investments, like Pinnacle Entertainment’s Riviere casino project, will bring new people to the area, and accessibility to LSU, the Bluebonnet Boulevard corridor and downtown draws folks tired of fighting traffic on, say, Interstate 10. Someone who works downtown can get there from Gardere in 10 minutes on Nicholson, he says, and that’s if you follow the speed limit.

“It’s only a matter of time in an area that’s undergoing such rampant growth that Gardere will be redeveloped,” he says, while also acknowledging the highly competitive apartment marketplace. “There might be a short-term glut, but we are confident that we’ve got what will turn out to be one of the best locations.”

From 1995-2005, 36 new apartment complexes totaling more than 6,800 units were built in the Capital Region, according to one report. While only about 1,328 had been completed since Hurricane Katrina as of spring 2008, nearly 3,500 units are either under construction or announced for construction in 2008.

Many developments were spurred in part by GO Zone incentives, and must have a certificate of occupancy by the end of the year to take advantage of the program. Estimates of Baton Rouge’s post-Katrina population growth vary widely, and it’s still unclear how much of that new construction can be absorbed.

The vast majority of the new apartments are aimed at the higher end of the income spectrum. As appraiser Wesley Moore (right) explains, the basic construction costs for an apartment building are the same whether you’re building an upscale product or not.

“The difference between an A and a B product is just the very finishing touches, usually,” says Moore, of Cook Moore and Associates. “What you find is for a few pennies of additional construction costs on the dollar, the additional rents that you get more than justify it. So the market speaks with its feet, because they all race to build upscale. No one’s building in the middle of the road.”

All that supply on the high end creates substantial pricing pressures at the top, which will gradually trickle down to the cheaper properties, Moore says. Recently, several developments in the $1,000-per-month range have reduced their rates without slashing prices by offering special deals, like one month free on a 13-month lease, and Moore expects we’ll see more of that.

Before the end of the year, he believes Baton Rouge will enter at least “a solid 12 months of a very, very rough stretch for landlords, particularly if you’re in the upscale market.” Rents might hold steady, bucking the historical trend of about a 2.5% yearly increase, or even drop for the first time in two decades, he says.

Still, many developers remain bullish. Lance Belcher, owner of Turnberry Place and Jefferson Shadows apartments in Baton Rouge and Emerald Forest Apartments in Covington, says he lost only three tenants [all to out-of-town moves] after recently implementing a 5% rent increase.

He says there’s actually a waiting list at Turnberry, where a one-bedroom unit rents in the $800s and a two-bedroom goes for a bit over $1,000. Belcher says many complexes increased their rates after Hurricane Katrina and are dealing with high vacancy rates because they’re just too expensive.

“In this crazy market, I’m inclined to maybe build,” Belcher says, while acknowledging it sounds counterintuitive. He believes a lot of developments going up now are in less-than-desirable locations. “They’re building in areas where they’re just tearing down a barn and building an apartment complex. Just because you build it doesn’t mean they’re going to come there.” But he says he has a prime location in mind, which he declined to reveal, that he thinks will work.

“I pretty much do the opposite of what everybody else does,” he says. “By the time you start building something, in a year or so, the market’s totally different. So you just kind of have to have that gut feeling.”