Baton Rouge Real Estate Becomes a Hot Topic!

Baton Rouge Real EstateBecomes Hot Property
By JEFF D. OPDYKEStaff Reporter of The Wall Street Journal
BATON ROUGE, La. -- Overnight, this city of 400,000 has grown faster than any other in America.
Exactly how many have come to the metropolitan area isn't known, but the tens of thousands of residents and business owners from across the hurricane-ravaged parishes of southern Louisiana seeking to rebuild businesses and lives illustrate a far larger picture of the mass migration that promises to reshape life in Gulf Coast and deep South communities such as Houston; Jackson, Miss.; Mobile, Ala.; and Memphis, Tenn.
"There is just a huge demand for office space," said Herb Gomez, executive vice president for the Greater Baton Rouge Association of Realtors. Anything you can turn into offices is being grabbed up at the list price. We have members [of the Realtors association] trying to find any vacant grocery store or old strip center that they can."
Mark B. Hebert, president of Kurz & Hebert Commercial Real Estate Inc., says "buildings we couldn't give away are now being snapped up" as businesses from as far away as the Mississippi Gulf Coast come looking for new space in Baton Rouge. Mr. Hebert says bank processing centers, law firms and a host of other service-oriented businesses "that never again want to be down for weeks at a time are calling us every day saying they want out and they want something permanent in Baton Rouge."
As a result, businesses are signing leases for Class A office space, the highest quality, at as much as $24 a square foot, up from $18 or $19 before Katrina. Class B space is up to $20 from about $15. Class C space, "where you were lucky to get maybe $8 to $10, is now going for $12," Mr. Hebert says.
One upscale shopping center still being built, and home to a Whole Foods Market that opened this summer, was about 73% leased before Katrina. Mr. Hebert says based on the influx of calls he and his partner are fielding, "this will be 100% leased when we open it again." He has to hire extra staff this week to handle the increased volume.
Similar dynamics are unfolding in the residential market. Before Katrina, "a fast sale here was a home that sold in a week in a hot neighborhood," says Judy Burkett, owner of Judy Burkett Realtors in Baton Rouge. "Today, homes last for minutes. You put them into the [Multiple Listing Service] system, and they're gone almost immediately."
Because phone networks haven't been completely repaired, buyers and agents are frustrated that by the time they ring through to a seller, an available house has already been sold. On average-priced homes in the $140,000 range, buyers are bidding as much as $10,000 above the asking price, sight unseen, and hoping to get a contract signed before a competing bid arrives. In one instance Ms. Burkett knows about a seller who accepted an offer on a house but hadn't yet signed the paperwork when another buyer knocked on his door and offered $30,000 more.
Homes that have been on the market for a year in some cases "are now receiving multiple offers at the listing price or above," says Betty W. Jackson, a CJ Brown agent who has sold off all of her inventory of homes.
Even in smaller cities, the impact is being felt. Amy Jones, a spokeswoman for U.S. Rep. Charles Boustany, said real-estate agents had reported to the Louisiana congressman's office that 250 homes were sold in one day in Lafayette, about 60 miles west of Baton Rouge. "Just about every available property here has been sold," she said.
President Bush passed through Baton Rouge yesterday, meeting with storm refugees and promising help. Earlier, Baton Rouge Mayor Melvin Holden asked for billions in federal aid to help the city handle the influx.
"We're now part of an experiment," says Jim Richardson, an economics professor at Louisiana State University in Baton Rouge. "An infrastructure that was meant to handle, maybe, 400,000 people, is now being asked to handle 500,000 or more. There are lots of pressures that are just now beginning to be felt."
The question regional cities and their public officials and business leaders now face is whether this dislocation is just a temporary upset or a permanent change. If it is the former, locals will have to learn to cope with inconveniences that could last for several months.
But if roots set and the changes now taking shape become permanent, local, state and federal governments will be pressed to come up with the money necessary to expand services and infrastructure, and to create new jobs, schools and subdivisions needed to make room for their new residents.
If anyone can find a place to live here, it is Arthur Sterbcow. As president of Latter & Blum/CJ Brown Realtors in New Orleans, Mr. Sterbcow has at his disposal a major property-management company located in Louisiana's capital city. Yet these days, even he has trouble finding a home for his family.
After a pine tree speared the center of his St. Tammany Parish home during Katrina's spin across southeastern Louisiana, Mr. Sterbcow phoned his company, one of the region's largest real-estate firms, and put in his request for a rental. "They told me all we have is one left, a two-bedroom apartment across the street from a drug-rehab center," Mr. Sterbcow recalls. "What was I going to do? I had to take it."
Such is life these days in Baton Rouge, where two cities have forcibly been merged into one, causing stresses and strains for which no government can adequately prepare.
Without changes, however, "the pressures on Baton Rouge's infrastructure will be astronomical," said Mr. Sterbcow. "The city can't just sit back and play catch as all these new residents and businesses arrive. If you screw up and don't provide the services and infrastructure, you're going to lose them to Texas,Florida, and Georgia."