It has soaring ceilings bedecked with chandeliers that hang above hardwood floors. The exposed brick walls feature distressed whitewash that accents designer-chosen furnishings from Restoration Hardware and Pottery Barn.
A year ago, the three-bedroom condo in the Cotton Mill building might not have been empty for even a day in between tenants — likely movie industry professionals who wouldn't have blanched at renting it out for $5,500 or more a month.
The Warehouse District complex — which features a secluded courtyard with a pool, 24-hour security and a full fitness center — was in high demand.
But with film work drying up after the Legislature trimmed back the state's tax credit program; with the oil and gas industry, another major employer, laying off workers; and with a surge in new Central Business District apartments, the Cotton Mill condo languished on the market for two months this summer before it finally found a tenant for $1,000 less than normal.
Although the unit still went for several times what a typical renter would pay in New Orleans, the difficulty in filling it may be a sign that the city's scorching-hot rental market is beginning to soften, according to analysts and landlords.
And while a slowdown is being felt most acutely at the top end of the market, people offering market-rate units throughout the city say they're no longer seeing the near-constant occupancy they had over the past few years.
"If the higher-end market can't stay afloat, the lower-end market can't either," said Karen Sepko, who manages several Cotton Mill condos and other units in the Warehouse District. "If the higher-end market is discounting, the lower-end market is too."
At the same time, rental rates appear to be continuing to climb at the lower end of the market, leaving many tenants paying more than they can afford in rent even as many landlords are having trouble making a profit.
But there does appear to be a glut of apartments, many brand-new, on the market.
Getting a full picture of the rental market is difficult in a city where many landlords rent out one or two units in the property where they live and don't list the properties with real estate agents.
But there now are about 1,190 available rental units listed with agents, more than twice as many as were available at the beginning of 2011. That includes almost 390 units Uptown and near the universities, 140 units in the CBD and Warehouse District and 126 in the Lower Garden District.
While peaks and valleys in the market are expected, there's been a sharp increase in available units since the beginning of last year.
Overall market strong
Despite the cooling off, many real estate experts said they still consider the market to be strong. While the city is no longer seeing a 98 percent occupancy rate, about 92 percent of units are being rented out, said Larry Schedler, who advises on the purchase and sale of multiple-family properties and publishes a regular report on the market.
"Have I seen some softening? Yeah, a little bit," Schedler said. "In the short term, I think it probably will take a little while to absorb some of the excess inventory."
The increase in the supply of apartments, particularly in and near the CBD, has been dramatic in the past year, as several new projects that are estimated to total about 1,000 units have started coming online.
At the same time, the job markets that provide many of the tenants for those apartments have shrunk. The movie industry has largely moved to other cities after Louisiana lawmakers last year changed the tax credit program to rein in its cost to the state, though some high-budget films are still being produced locally.
Meanwhile, low oil prices have caused cutbacks in the energy sector.
At the same time, some Uptown landlords say they're having trouble renting for the first time in a decade or more. Those units, typically in more affordable ranges geared at students, normally are snapped up quickly. But as the school year started, many remained empty.
There's at least some evidence of a split within the market. Tom Leonhard, president and chief executive officer of HRI Properties, said he's seen it with the thousands of apartments his company manages, including a mix of high-end, market-rate, mixed-income and subsidized units.
A year ago, about 98 percent of all those units were rented. Now, that number is in the low 90s, almost entirely due to vacancies in the market-rate and higher-end units, Leonhard said. Demand is still strong for apartments at the lower end of the scale, he said.
"All those (lower-end) properties maintain a wait list, and when a unit becomes available, it moves quickly," Leonhard said.
That split between the high and low markets represents a key issue for the city. James Amdal, a senior fellow at the University of New Orleans' Transportation Institute who has studied the Warehouse District, said both the undersupply of lower-income housing and the oversupply of higher-end properties result from development patterns since Hurricane Katrina.
"Citywide, it seems as if affordable housing has become an absolutely critical in-demand commodity, and there just isn't any," Amdal said. "I think it dates to Katrina and post-Katrina and no one really understanding or knowing what needed to be done. Everyone decided that the low-hanging fruit was upper-middle, upper-class housing."
'Affordable housing crisis'
Andreanecia Morris, executive director of HousingNOLA, said her group, a collaborative of nonprofits, homebuilders and other organizations working on expanding the supply of affordable housing, has its own concerns about the market.
"There are high-end properties that are sitting vacant that people can't get into because they simply can't afford it. There are middle-of-the-road properties that people can't get into because of things like insurance and property taxes," Morris said. "Then there are people who are living in their houses or renting and are cost-burdened. All those things together create the affordable housing crisis."
In theory, the city should not have a housing problem, given that it is now home to 200,000 fewer people than at its peak of 600,000 several decades ago. That should mean housing — or at least land where housing could be built — should be readily available, Morris said.
But the city has seen rents steadily increase since Katrina, up to an average of $900 in 2014 and to $946 last year, she said. And more than half the city's renters remain cost-burdened.
That suggests the problem is not too many units overall, said Morris, but a "mismatch in the market."
Reducing the cost burden on lower-income renters, she said, could help stabilize the market at all levels to prevent an overall bust. HousingNOLA is pushing initiatives such as requiring that all multiple-family developments include affordable units, plus other measures designed to reduce utility and other costs.
"The boom we've seen, given the economics, is not sustainable," Morris said. "Given the wages of most of our citizens, housing prices continually going up is not something that New Orleans could sustain."
Clouded crystal balls
A different type of mismatch could also be playing into the rental numbers. Rick Haase, president of Latter & Blum, said that with rents rising, interest rates low and mortgages more available, many potential tenants may now be looking to buy for themselves.
"It's usually much less expensive to rent a property than it is to buy a property," Haase said. "I started looking at the numbers, and the median-priced home costs less to buy today than the median-priced rental."
Haase said that for both sales and rentals, his company is seeing price increases in the middle portion of the market while higher-end properties are seeing a slowdown. In addition to employment issues, he said, lower enrollment at the city's colleges and universities is cutting into demand.
Right now, "everyone's crystal ball is a little clouded," Haase said. But he said he believes the market will balance out, driven in part by younger renters — who until now may not have been able to afford to live alone — earning enough to strike out on their own.
Sepko, the Cotton Mill condos manager, has a more dire view of the situation than some of the others watching the market.
While the properties she manages go for hefty sums, she said that when all the costs are added up — including the mortgage, insurance, property taxes and condo fees — many of the condo owners she represents are barely breaking even or are taking a loss on their properties. If prices continue to decline, she said, that could mean foreclosures will ripple through the market.
"It takes a little while to get the snowball going, but once it starts going downhill, it starts going fast," Sepko said.