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High interest rates and increased construction costs have continued to hamper the Baton Rouge land sector.
The result is that the market is on pace to have one of its worst years in total dollar volume since 2015, according to Elifin Realty’s market reports.
The total dollar volume of sales per year for the Baton Rouge land sector at the end of July was $24 million, down from $49 million at the end of July 2023. The lowest total dollar volume in the last nine years was $48 million in 2019. That year, sales were at $24 million at the end of July. The sector’s best year was 2021, when sales totaled $118 million. The next highest was $94 million in 2017.
The average price per square foot was $6.73 at the end of July, down from $7.13 in June and the sector’s lowest mark in at least eight years.
“What we have been seeing with residential land and development is because of the high interest rates and the high rates right now, the development side of things has been low,” Elifin Realty’s Peter Laville says. “We’ve had increased construction prices and everything as a holdover since COVID, so that side of things has been a little slower. A lot of cities are hesitant to allow major residential developments. Everybody’s waiting to see if rates will go down a little bit, construction costs will come down a little and allow for easier development.”
Although residential land development has slowed, Laville says retail has grown. He notes south Baton Rouge and the Airline corridor as places seeing retail growth.
Laville has been involved in the land market for four years and says he’s noticed a trend of rebranding and rebuilding in certain parts of the area.
“There’s a push to grow some of these surrounding areas,” he says. “Zachary is growing a lot. The Prairieville/Gonzales area has experienced a ton of growth in the last couple of years. Denham Springs, up until the moratorium, was growing like a weed. Then you have the revitalization of the Florida corridor, which is the most exciting thing that’s happened in the last couple of years.”
According to Laville, rough market conditions have not prevented experienced developers from starting projects, but they are having significant effects on newer developers who are staying away from new development.
“A lot of people are holding,” Laville says.”They are saying they’ll wait and see past election season and see how the market recovers with the expected rate drops toward the end of the year.”
