Strip Retail Centers in the Gulf South: Why Small Retail Centers Are Quietly Outperforming

When most investors talk about “retail,” they jump straight to glossy lifestyle centers or the big grocery-anchored deals that make the trophy-case slide decks.

Meanwhile, a quieter story is playing out along Airline Hwy., Jefferson Hwy., Johnston St., Veterans Hwy., Hwy. 49 and every other major corridor in the Gulf South:

Small strip centers are getting tighter, more valuable, and harder to buy.

If you own one, that matters.
If you’d like to own more of them, that really matters.

The Numbers: What’s Actually Happening Here?

Let’s start local instead of national.

• Baton Rouge: A Spring 2025 shopping center survey covering 8.6 million square feet of multi-tenant retail reports 7.4% vacancy overall, with stronger submarkets like South Baton Rouge at 6.16% vacancy and Prairieville effectively 100% leased in the center sample. Average asking rents moved from $20.68 to $21.65 per square foot in a year – roughly 4.7% rent growth. (Source: Baton Rouge Retail Market Survey, Spring 2025)
• Lafayette: The Q4 2024 retail report shows overall vacancy around 3.2%, with general retail at just 1.5% vacant and neighborhood centers at 4.4%. Just ~12,000 square feet of new retail is under construction in the entire market. (Source: Lafayette Retail Market Report, Q4 2024)
• New Orleans: NAIOP’s Q3 2025 retail snapshot pegs metro retail vacancy at about 4.5%, very much in “tight market” territory. Over the prior year the region delivered roughly 400,000 square feet of new retail, but that space has been absorbed at healthy rents, with a recent Winn-Dixie-anchored center trading at an 8.5% cap rate and overall retail cap rates around 7.4%. (Source: NAIOP New Orleans Retail Market Report, Q3 2025)

If you zoom out from Louisiana to the broader South, Integra Realty Resources’ Mid-Year 2024 Viewpoint shows community and neighborhood retail cap rates in the South hovering around 7.2%, with neighborhood retail rents in the South growing about 1.18% year-over-year, the strongest growth of any U.S. region.

Along the Mississippi Gulf Coast, cap rates for multi-tenant retail centers are often quoted in the mid-6s to high-8s, depending on location and tenant mix – right in line with what we’re seeing in Baton Rouge, Lafayette, and New Orleans.

Translation: In the Gulf South, well-located strip centers are offering 7%+ going-in yields in markets where vacancy is low and new construction is limited. That’s a pretty attractive risk-adjusted return in today’s commercial real estate world.

Why Strip Centers Are Quietly Winning

Three big shifts are driving this:

1. The Tenant Mix Has Changed

The classic picture of a strip center – soft goods and a few small retailers – is outdated.

Up and down the Gulf Coast, these centers are increasingly filled with:

• Medical and dental clinics
• Physical therapy and wellness uses
• Fitness and boutique gyms
• Quick-service and specialty restaurants
• Personal services (hair, nails, pet care, tutoring, etc.)

These are internet-resistant, appointment-driven businesses. They function as “time anchors” – people have to show up at a specific time, so they keep traffic flowing to the center in a way a pure retail boutique never could.

That’s not a theoretical national trend; it’s exactly what we’re seeing in Baton Rouge, Lafayette, New Orleans, and coastal Mississippi.

2. New Supply Is Scarce

Most of the new retail getting built in our region falls into one of three buckets:

• Grocery-anchored and power centers in a few high-growth nodes
• Single-tenant build-to-suit (dollar stores, QSR, clinics)
• Pad sites in front of existing centers

What’s not being built in any meaningful volume is the classic “inline” strip center down the street from neighborhoods and schools.

In Lafayette, for example, only ~12,000 SF of retail is currently under construction. In Baton Rouge, the Spring 2025 survey notes that new development has been mostly pads and build-to-suit, not speculative multi-tenant strips.

When you combine limited new product with steady tenant demand, older but well-located centers start to look less like B-class leftovers and more like essential neighborhood infrastructure.

3. Capital Is Catching On

Nationally, Northmarq’s Q3 2025 report shows multi-tenant retail sales volume of $14.1 billion in the quarter, up nearly 40% year-over-year, with average cap rates around 7.11%. Private buyers still make up the majority of acquisitions, but institutional investors now account for roughly 22% of multi-tenant retail purchases, up several points from 2023.

On the debt side, Colliers’ CMBS snapshot for early 2024 shows retail loans pricing between 6.2% and 9.0%, with an average interest rate around 7.2% and an average LTV around 45.5% for those securitized deals.

Layer that national data over what we’re actually seeing in the Gulf South, and a few patterns emerge:

• Buyers are still willing to pay for stable strip centers with strong tenants
• Cap rates in the high-6s to mid-7s are achievable for good locations, with weaker or more tertiary centers trading higher
• Lenders are generally comfortable in the 55–70% LTV range for well-leased neighborhood centers, depending on the credit story and rent roll

In other words: there is capital for this product, and it’s increasingly viewed as a legitimate “core neighborhood” asset class, not an afterthought.

What This Means If You’re an Owner

If you own a strip center in Louisiana or along the Gulf Coast, the current environment gives you a few options:

1. Sell into strength.
   If you’ve owned your center for 10+ years, you’re likely sitting on a lot of embedded equity. With low vacancy, solid rent growth, and investors actively seeking neighborhood retail, you may be able to achieve pricing that looks more like “institutional quality” than it would have five years ago.
2. Refinance and hold.
   With rents drifting up and supply limited, many owners are choosing to refinance, lock in debt, and continue to ride the cash flow. Even with rates in the 6.5–7.5% range, the spread over 7%+ cap rates can still make sense if you believe in your tenants and your submarket.
3. Re-tenant and reposition.
   Centers with vacancy today may actually represent some of the best upside. Backfilling with medical, wellness, fitness, and service tenants can convert an under-performing strip into a durable cash-flow asset.

What This Means If You’re a Buyer

For investors who have been sitting on the sidelines waiting for “clarity,” this might be it:

• Yields: Initial cap rates often in the 7–8%+ range in our region, with upside through leasing and rent bumps.
• Risk profile: Tenant mixes skewing heavily toward service-based, internet-resistant uses.
• Supply/demand: Limited new construction competing with you, especially in mature infill corridors.
• Exit options: Deep buyer pool including private investors, family offices, and increasingly, institutional capital that now understands the strip-center story.

The challenge isn’t the thesis – it’s finding the right deal, at the right basis, in the right submarket and then executing on the leasing and asset-management plan.

Bottom Line

Strip retail centers in the Gulf South are no longer the overlooked “B-minus” asset you buy only if you can’t find anything else.

The data says:

• Low vacancy in key metros like Lafayette, Baton Rouge, and New Orleans
• Solid rent growth, especially in infill corridors
• Limited new supply, which supports pricing power for existing centers
• Cap rates generally north of 7%, even as institutional capital drifts into the space

If you own a strip center and want to understand what today’s market would pay for it – or if you’re looking to buy your next (or first) center in Louisiana or along the Gulf Coast – this is a window worth paying attention to.

Justin Langlois, CCIM is a Commercial Real Estate Advisor with Stirling Investment Advisors, specializing in investment sales and landlord strategy across the Gulf South. Contact Justin to talk leasing strategy, portfolio value, or end-of-year positioning.