New Orleans recently celebrated a significant milestone: the 10-year anniversary of Hurricane Katrina making landfall. Those familiar with the area’s commercial real estate market agree that the city continues to thrive in and around the metro area. Despite a low vacancy rate and shortage of commercial opportunities in downtown proper, competition is fierce for quality properties, and new-to-market retailers have moved into the area.
From the market downtown to the immediate suburbs and surrounding parishes, the Big Easy is well-positioned for continuous, steady growth.
Kirsten Early, SRSA Commercial Real Estate Inc.
Sharing a border with New Orleans, Jefferson Parish is the most populous parish in the state. Veterans Memorial Boulevard is a six-lane thoroughfare in Jefferson Parish, which remains the primary retail development corridor in the market with the 120-store Lakeside Shopping Center. One of the most desirable spans of commercial real estate, the seven-mile stretch of highway runs from the airport to the intersection of Jefferson Parish and Orleans Parish.
After scouring the market for several years, Trader Joe’s recently announced its first New Orleans metro area store in one of the last undeveloped tracts on Veterans Memorial Boulevard. Another grocery retailer, The Fresh Market, opened its first Jefferson Parish store in July. In addition, the Louis Armstrong New Orleans International Airport will open a new $650 million terminal.
A Developing Situation
A sizable new influx of younger urban residents has played a big role in its ongoing commercial real estate boom. With this, New Orleans will soon add more than 1,800 residential units in the coming months as residential development continues to rise.
In recent years, the development landscape of the city has dramatically changed. With the city’s Central Business District, Warehouse District, Bywater Neighborhood and Canal Street all featuring new additions, downtown New Orleans has been particularly busy. Being a city known for its food, a new restaurant announcement almost every week is not a surprise. Along with familiar names such as Aaron Sanchez, John Besh and the Brennan family, first-time entrants to the market and a number of fast-casual and farm-to-table restaurants are among the abundance of restaurants opening citywide.
Located on prime real estate at the entrance of the French Quarter on the Mississippi River, the New Orleans World Trade Center building will be redeveloped as a 350-room Four Seasons Hotel with 76 condominiums serviced by the hotel — the flag’s first New Orleans location.
On Loyola Avenue, an Arhaus Furniture and CVS/pharmacy headline the mixed-use South Market District Phase I — The Park — on the ground floor of a newly constructed parking garage. The Paramount, which includes 209 residences, is home to Barre 3, Blaze Pizza, Company Burger, Stone Free apparel and Willa Jean Bakery (a John Besh concept). Phase III is under construction and will add The Beacon, a residential property with 120 apartments, as well as approximately 20,000 square feet of additional retail space.
Formerly the Charity Hospital, the Louisiana State University teaching hospital that shuttered after Hurricane Katrina has attracted five investor groups. Located between the central business district and the biomedical district, Charity’s redevelopment is a vital piece of the New Orleans redevelopment story.
Other significant developments and redevelopments across the greater New Orleans metro area include the Premier Center in Mandeville with the addition of Whole Foods Market to its tenant mix; the 65,000-square-foot redevelopment of a former Home Depot in Mid-City on Carrolton Avenue anchored by Petco, Marshalls and CVS/pharmacy; and Fremaux Town Center on the eastern side of St. Tammany Parish boasting some 350,000 square feet of retail space that includes a Best Buy, Dick’s Sporting Goods and Kohl’s. Phase II of Fremaux is set to come on line in late 2015 with Dillard’s and F21 Red.
Space is at a Premium
While Magazine Street — a five-mile stretch of boutiques and high-end retail options — remains an especially popular location, there are low vacancies and high rents across the city. Retailers have had to aggressively pursue space as the market is particularly dense, competitive and geographically limited. So competitive, in fact, that big national names like CVS/pharmacy, Trader Joe’s and Walmart have made exceptionally lucrative offers to local businesses to acquire their property — and have been rejected. As the New Orleans commercial real estate market continues to thrive 10 years after Hurricane Katrina, this kind of unusual circumstance is emblematic of both the character and competition that continue to distinguish the dynamic state.
— By Kirsten Early, CCIM, Partner and Director of Retail, SRSA Commercial Real Estate Inc. The article originally appeared in the October 2015 issue of Southeast Real Estate Business.