Commercial deals on the rise locally

A decline in commercial property construction during the past few years has not hurt the availability of industrial, office or retail inventory.

According to the National Association of Realtors, a reduction in building has actually helped stabilize this segment of the real estate market. Existing space means those looking for new business locations are expecting the best deals possible while they are available.

“Very limited construction of new commercial real estate over the past few years has essentially fixed the supply of available space,” said NAR chief economist Lawrence Yun. “This means vacancy rates could fall quickly from any increase in demand for commercial space.”

A drive through the Tri-parish region offers a wide sampling of commercial property options. From a 14,820 square foot retail space at the intersection of Seventh Street and Brashear Avenue in Morgan City to an office building and twin warehouse structure at 311 Jackson St. in Thibodaux, listings are plentiful for a variety of locations to conduct business.

“On the lease aspect, we are leasing things on the commercial end now,” said Bayou Board of Realtors President Debbie Chauvin. “Oil field related, I’ve done well leasing and selling since October 2010. I sold a couple of commercial buildings last month and we always see a few commercial calls.”

Retail rental rates vary among properties and are all based on location. At Plaza Caillou on the east side of Houma, leases range from $3.12 to $36 per square foot.

Prices were not available for the Southdown Mall in Bayou Cane, but like most enclosed retail centers, the associated costs are generally higher than at open shopping centers. Malls also tend to attract more seasonal and specialty shops and see greater turnover. That prompts owners to charge extra in an effort to make up for times a unit may have stood empty. At the end of March, there were 18 spaces available at Southdown Mall.

A 4,950-square-foot, multi-use commercial building has been listed for the sale price of $385,000 in Terrebonne Parish, while an industrial location such as the Dulac Shipyard has been put on the market with an asking price of $3.7 million.

Free standing regional office properties easily range in purchase price from $50,000 to $500,000.

“I think people are tired of waiting [for the recession to show an obvious turnaround] and are starting to move forward,” Chauvin said.

During the next 12 months, Yun expects to see a decline 0.5 percent in office vacancies, a 1.3 percent drop in available industrial property and a 0.1 percent decline in open space for the retail sector.

Yun also warned that as there is a reduction in available space, prices are likely to increase with demand and could be boosted by as much as 4 percent by this time next year.

Robert Powell’s family owns a commercial property location at 1396 W. Tunnel Blvd. in Houma. For five years it housed a Suzuki dealership. It was home to a seasonal Mardi Gras store during the first two months of this year. But it currently stands empty, waiting for a tenant or buyer.

“I’ve probably taken 50 calls for it since the Suzuki people left [in October 2010],” Powell said. You get a lot of interest, but people want some deals [and] we’re not going to give it away.”

Powell said that if he is able to secure a multi-year lease he would consider making the deal for $4,000 a month. To purchase the building and enclosed back lot, he is asking for $850,000.

“A lady I negotiated with is interested in a two-year lease,” Powell said. “But nothing has been signed and no money has been exchanged. So right now it is still available.”

Experts in the field contend that after two years of a buyers’ market being in place, the tide will probably soon turn as what appeared at one time to be an overabundance of commercial inventory becomes tighter due to anticipated demand.

“Right now, I would say [the market] is showing increasing [activity],” Chauvin said. It’s not setting the world on fire, but it is not at a dead stop.”