T
he Baton Rouge commercial real estate market in 2025 is expected to mirror last year's trends, according to Jonathan Walker of Maestri Murrell. This forecast is partly due to the Federal Reserve's reduced rate cuts this year.

    High construction costs, insurance rates, and borrowing expenses will continue to hinder new development, prompting a shift towards leasing existing facilities across retail, industrial, and office sectors. Elfin Realty's data shows commercial sales in 2024 were on pace for their lowest level in nine years.

    Occupancy rates are likely to remain steady or rise due to the limited new supply entering the market. Walker notes that there has been little new development over the past two years, a trend he expects to continue for at least another year.

    Investors may opt for buying existing facilities with partial or full occupancy, as building from scratch requires commanding high rental rates. Retail property values reached an eight-year high of $285.11 per square foot in November.

    While new construction stalling has its drawbacks, Baton Rouge's market avoids the volatility seen in larger areas like Houston. A notable trend is that new commercial projects often occur when a tenant is already secured for the space.

    The market is also seeing growth from discount users and service industries. Walker notes that good deals are still available for tenants looking to expand, particularly in centers with existing infrastructure. However, existing landlords face challenges refinancing their properties, which can impact cash flow due to high-interest rates and loan maturities every five years.

    Walker predicts a shift towards leasing over new construction will continue for the next 24 months, driven by the current market conditions.