In 2020, the Greater Baton Rouge area retail market experienced a significant decline due to the COVID-19 pandemic. With occupancy rates at an 8-year low, retail in the Baton Rouge area seemed to be facing a serious downturn. However, in the years leading up to 2022, certain measures taken by government officials, as well as local landlords and lenders, allowed the retail market to rebound substantially. As retailers begin to gain more confidence in the market, we can expect to see positive progression for retail in Baton Rouge and surrounding areas.

Momentum’s Clay Furr and President Charlie Colvin, CCIM currently serve on the Retail TRENDS Committee. For the 2022 Annual TRENDS Seminar, our momentum constituents took part in conducting a survey to determine where the Baton Rouge area retail market is positioned today and what to anticipate for the future.

Retail TRENDS: Shopping Center Survey Spring 2022

The 2022 Retail TRENDS Committee created a survey that analyzes anchored spaces, larger stores that help drive foot traffic to smaller surrounding stores, and unanchored spaces, a substyle property with multiple retail-based tenants. This method was seen as a strong indicator of what “small shops” are primarily leasing for. By tracking rental rates on a high-low basis, the committee determined the average rental rate of each property involved in the survey. Anchor spaces whose lower rental rates skew the average downward were excluded.

The survey was conducted throughout February and March of 2022 with responses from 127 shopping centers in East Baton Rouge, Ascension, and Livingston Parishes. “Extensive independent verification was not provided, however, quoted rents and/or vacancies that appeared out of the ordinary were checked.”

In 2021 retail spending was at an all-time high, exceeding 2019 levels by 20%. With constraints from the pandemic and such a high demand from consumers, retailers started to fall short on multiple ends. Expanding brick and mortar stores became a challenge due to increased construction costs and stalled production times. Fulfilling orders also turned into concern as supply chains endured slowed distribution, price surges, and labor shortages. As retailers adjust to the new normal, it’s likely there will be additional hurdles to overcome. We have been cashing in on low inflation and interest rates for some time now, however, in recent months inflation has swelled into the 8 - 12% range. Considering the alarming spike in inflation rates, we can only assume that consumers will narrow their spending by cutting back on non-essential purchases like entertainment and travel.

What Can We Expect?

According to the 127 shopping centers surveyed this Spring, vacancy rates have dropped to 8.1%, a -1.69% change from 2021, while the average rental rates remain around $19.60 per square foot. A recent market trend, determined by the committee, shows a shift towards “more service-oriented industries, especially in health and wellness.” Franchises including fitness studios and physical therapy clinics have expanded locally and nationally in recent years and are projected to continue this trend.

WANT TO LEARN MORE? https://www.batonrougetrends.net/market-data/

 Source: 2022 Retail TRENDS committee shopping center analysis

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