$1,273 2Q 2024
2.4%
92.1% 2Q 2024
10 BASIS POINTS
187 [YTD: 384]
82 [YTD: 82]
In the first two quarters of 2024, the renters in the New Orleans multifamily market absorbed 384 units, significantly outpacing the new supply of 82 units that came online during the same period.
Annual effective rent growth in New Orleans has been remarkably consistent over the past six quarters, falling below 2.0% in just one period.
In the second quarter of 2024, rents surged by 2.4% year-over-year, pushing the average effective rental rate to $1,273.
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
In the first two quarters of 2024, the renters in the New Orleans multifamily market absorbed 384 units, significantly outpacing the new supply of 82 units that came online during the same period. Rental demand is primarily concentrated in mid-range and upper mid-range properties. Conversely, demand for workforce housing assets—which constitute about 37% of New Orleans’ apartment inventory—remains weak, indicating financial strain among lower-income households in the area.
Construction has slowed significantly in the New Orleans multifamily market in recent quarters. The current pipeline of 752 units under construction represents just 1.1% of the existing rental housing stock, starkly contrasting with the national average of 4.0%. This limited construction is evident in the trailing 12-month total of new deliveries, which amounted to a modest 82 units. The units currently under construction are concentrated in only three submarkets: Eastbank/Jefferson Parish (490 units), Uptown New Orleans (211 units), and Mid-City New Orleans (51 units).
The average occupancy rate in New Orleans continued its upward trajectory for the second consecutive quarter, growing by 30 basis points quarter-over-quarter to 92.1%, to close out the first half of 2024 while on an annual basis, occupancy shifted up by 10 basis points. Improved consumer confidence and a muted delivery schedule over the past year contributed to this improvement. At the submarket level, seven of New Orleans’ fifteen submarkets noted an improvement in their occupancy rates compared to one year prior. The Algiers submarket, located on the west bank of the Mississippi, experienced a substantial 320 basis point annual increase in occupancy. Conversely, New Orleans East, located on the southeast bank of Lake Pontchartrain, witnessed a 460-basis point annual decline in occupancy.
Annual effective rent growth has been remarkably consistent in New Orleans over the past six quarters, dipping below 2.0% in just one of those periods. In the second quarter of 2024, rents climbed 2.4% annually, raising the average effective rental rate to $1,273. While market-level rent growth has been steady, submarket growth displayed significant variance. Fourteen of New Orleans’ fifteen submarkets recorded annual rent increases, but the degree varied widely. The Gentilly submarket, located near the urban core and containing roughly 600 units, recorded the strongest growth at 9.4%. Conversely, Downtown New Orleans exhibited a more subdued pace of growth at 0.2%. Looking ahead, rent growth is expected to accelerate further as demand holds steady and the pipeline remains limited.
Average Monthly Mortgage Payment
Average Monthly Rent
According to MSCI, two transactions totaling approximately $70 million occurred in the first half of 2024 in the New Orleans metro area. The bulk of this volume was driven by the sale of the newly constructed 360-unit Waters at Manhattan, which traded for $65.9 million in March. At the time of the sale, occupancy was reported at 94%. The New Orleans market is not heavily traded; since 2014, an average of three deals meeting MSCI criteria typically occur in the first half of the year.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
|
Under 35 Years
|
35 to 44 Years
|
45 to 54 Years
|
55 to 64 Years
|
65 to 74 Years
|
75 to 84 Years
|
85 Years & over
|
|---|---|---|---|---|---|---|
|
-2.3%
|
0.3%
|
-0.5%
|
0.3%
|
1.4%
|
0.8%
|
0.0%
|
New Orleans is experiencing a segment of older residents opting for rental living, with individuals aged 65 and above becoming the fastest-growing group of the rental market. Between 2019 and 2022, there was a 1.4% increase in renters aged 65-74, highlighting the growing demand for rental housing tailored to the needs of an aging population. These properties are increasingly located near healthcare facilities and lifestyle amenities such as parks and golf courses.
New Orleans’ rental market is poised for continued growth in the coming quarters. A combination of factors, including improving occupancies, reduced new construction, and expanding economic conditions, is expected to drive rental increases in excess of 3% by the year’s end. Although the city’s reliance on tourism presents unique challenges, New Orleans’ distinctive culture and lifestyle continue to attract new residents and visitors. The resurgence of the cruise industry is a positive sign for the overall tourism economy, bringing a renewed sense of vitality to the city.
