Prior to the destruction of Katrina, construction cranes were a big part of the New Orleans commercial real estate (central business district) landscape as a proliferation of hotel and residential conversion projects neared completion. Currently, eight hotels comprising over 2,500 rooms are in development in the CBD, most of which are adaptive reuses of older office buildings. The 452 room Ritz-Carlton and adjacent 218 room suites hotel on Canal Street is the most ambitious of the hotel projects. It opened successfully, then closed for repairs after the storm.  A twelve story building comprising 35 luxury condominium units starting in price at $350,000 sold out downtown at 625 St. Charles Avenue, and many more are planned, including one on Poydras Street owned by Donald Trump.  Prices range from $200 to $450 per square foot.

Harrah's opened their downtown New Orleans casino in October, 1999 and have been aggressively marketing outside of the area.  Their own new hotel is now open across the street from the casino.  A $110 Million 18,000 seat sports/activity arena located directly adjacent to the Superdome opened in October, 1999, and is the home of the New Orleans Hornets.  Most of the home games are currently being played in Oklahoma City, but the owner pledges to return to the Crescent City in 2008.

The downtown Class A office market enjoyed positive absorption before the storm, spurred in part by movement from available space in the suburban Metairie market. However, after the hurricane, many buildings were badly damaged and have not returned to normal.  Other rates are easing, also, as over 600,000 sq.ft. of space, much of it long term sublease opportunities created by oil company downsizing, has been introduced into the downtown marketplace.  Chevron announced in May, 2006 that it was moving 550 employees to Covington, La.  About 100,000 sq.ft. of suburban sublease space is now on the market but most of it represents short-term opportunities for prospective subtenants.  A 78,000 s.f. suburban office building in the James Business Park in St. Charles Parish recently came on the market.

Retail is not as strong a component of the local economy as it was before Katrina. However, Wal-Mart is now operating SuperCenters south of Lake Pontchartrain. One unit opened on Manhatten Blvd. on the westbank and three additional units are now finished construction in two eastbank locations: West Esplanade Avenue in Kenner and Jefferson Highway at Clearview Parkway in Metairie, with a second westbank location along Behrman Highway in Algiers.  The first Wal Mart stand alone grocery store opened in the spring of 2006 in Kenner.

Sav-A-Center groceries has been an active player in the market. Sav-A-Center opened six stores at former Schwegmann's Supermarket sites. Schwegmann’s shut down operations shortly after its owners filed for bankruptcy in March, 1999. Local grocer Robért Fresh Markets opened in four former Schwegmann’s locations but later closed one. Delchamps announced in February, 2000 that it would close five area stores as did Albertson's.  Winn-Dixie closed several stores here as part of an overall cost cutting strategy.  Other big box activity includes Bed Bath & Beyond, which opened its first New Orleans area store in Mandeville, and Burlington Coat Factory, who recently opened their second area location. Lowe's Home Improvement Warehouse has enjoyed successful footholds in its first two New Orleans area sites in Metairie and Slidell, both former Schwegmann's locations, and is scouting westbank locations for a third store.  One store recently opened on Jefferson Highway just outside of the flooded area of Uptown, and another opened very successfully on Elysian Fields in one of the hardest hit areas of town.  Best Buy has opened its first New Orleans area location in Metairie and is expected to follow with additional stores. PetsMart has locked in their first two area locations in Elmwood and on the northshore.

The 1.1 million square foot Plaza Mall in east New Orleans was purchased before the storm, and the new owners still hope to redevelop the property with a mixed-use plan now in discussion. Hudson's has recently leased the former Mervyn's location.  The $76 Million Jazzland Theme Park, operated by Six Flags, at the intersection of Interstates 10 and 510 in east New Orleans was heavily damaged and is not expected to reopen. The 140 acre park was projected to draw 1.4 million visitors annually.  

The former 1 Million sq.ft. MacFrugals distribution center, which burned down in a spectacular 1996 fire, was purchased by local developers who redeveloped it as a major new distribution center. One major beverage distributor has moved in and is operating.  Wal-Mart has a new a $35 Million 815,000 sq.ft. distribution center just east of Hammond in Tangipahoa Parish.

Before the storm, the New Orleans industrial market was characterized by slow but steady activity.  Immediately after Katrina damaged many facilities and destroyed others, the market for warehouse space went wild.  There was a large positive net absorption of  industrial space.  The aggregate 4.2 million square feet warehouse space available in 2003 in the metropolitan area was a 10 year low.  However, after the hurricane, New Orleans industrial space became a premium.  Scores of entrepreneurs came to town to seize the opportunity to import products and to sell to those who needed to rebuild.

Katrina dramatically changed the New Orleans commercial real estate market. Aside from the obvious, it created lots of opportunities.  Investors call frequently looking for "a good deal"; and, by the end of 2006, numerous retailers were looking for locations to replace older ones.  Some people just closed up and moved on, creating vacancies for others to fill.

By early 2007, Orleans Parish had a population of just over 200,000, and Jefferson Parish numbered roughly 460,000.

One phenomenon in New Orleans commercial real estate that occurred was the sale of numerous properties that were heavily damaged and not for sale prior to the storm.  Afterwards, sellers sold out at lower prices than they would have before, but kept the insurance proceeds that they received for a net gain.  Buyers got a location that could be redeveloped (that would not have been available previously), and I made a sale that may not have happened otherwise.

If fact, I've made over a dozen such sales.

People frequently ask me about the future of New Orleans commercial real estate.  It amazes me how often my phone rings with people looking for commercial real estate opportunities.  Thanks to this website, I have had hundreds of inquiries from buyers and lessees around the world who have faith and confidence in our future prosperity.  Some see that our prices are a lot lower than theirs, thus they predict that our properties are undervalued and they buy.

We believe that we have billions in federal aid that will be poured into this area in the next several years.  As our citizens trickle back in, properties are restored one by one, and this money hits our economy, we believe that things will improve dramatically.

Even our politics has been affected.  We recently voted to consolidate several levee boards into one, and we voted out the seven assessors in Orleans Parish in favor of one.  Our public schools, which were deplorable, have become charter schools and many have been taken over by the University of New Orleans or the State of Louisiana.  Anything is an improvement.

Meanwhile, Metairie commercial real estate is booming.  Metairie was not hit quite as hard as New Orleans, and residents have spent large sums of money on their properties.  Sales tax collections are setting records, and the economy is sound.  In November, 2006, a new cultural center was finally announced to be constructed on Airline Drive near the Zephyr Stadium.

This recovery process of the New Orleans commercial real estate market will take a decade, but I'll bet that our area will come back nicely.  The reduction in our population has hurt us, but the workers, investors, retailers, contractors, entrepreneurs, and business owners who are moving into the area represent just the kind of spirit that we need.

I'm happy to say that I really enjoy selling and leasing New Orleans commercial real estate, I have been fortunate to do a lot of it - especially since the storm - and I would be very happy to help you in your commercial real estate endeavors here.

Skip Weber, CCIM  

For more information, please click on NAI/Latter & Blum's commercial page.