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Top 10 Influencers

New Orleans’ top real estate professionals discuss the current status of the city’s residential and commercial markets and make projections about what lies ahead.




LEFT- The Paramount at South Market (611 O’Keefe Ave.) and RIGHT- The Seaworthy Restaurant — an oyster bar (630 Carondelet St.) that is part of the new Ace Hotel

  

LEFT- The Beacon at South Market (1000 Girod St.) and The Paramount at South Market (611 O’Keefe Ave.) are both luxury apartment buildings by The Domain Companies that are part of the five block South Market District development catering to the current demand for downtown living.  RIGHT- The Seaworthy Restaurant — an oyster bar (630 Carondelet St.) that is part of the new Ace Hotel 
 




URBAN DEVELOPMENT

Wesley J. Palmisano

President and CEO, Palmisano Group


Wesley J. Palmisano is the president and CEO of Palmisano Group, a New Orleans Construction Firm. In 2013, Palmisano took over the family business, changing its focus from residential to commercial and civil construction. In just three short years, the company has added more than 75 employees while experiencing a 200 percent growth year over year.

Under Palmisano’s leadership, the company has quickly become New Orleans’ sought-after firm for the construction of downtown hotels, multi-use developments, retail spaces, restaurants and healthcare facilities.  This year alone, he was named EY Entrepreneur Of The Year 2016 in the Industrial Services and Construction category for the Gulf Coast, was named to the NOLA 100 list of the city’s leading entrepreneurs and was one of six entrepreneurs recognized as a Rising Star by Junior Achievement.  

How would you describe the status of urban development in New Orleans?

Urban development has prospered in New Orleans over the past three years and is still going strong. The trend towards downtown living and the booming tourism market have created demand for development and construction of apartments, retail, hotels, restaurants and condominiums. It is exciting to see many of the vacant historic buildings being revitalized and placed back into service. In addition to building renovations on every corner downtown, there are also a few new high-rise buildings currently under construction. This is significant because we have not seen this type of new construction in the past 10 years. New Orleans is an exciting place to work right now.   
 
How are the developments your company is doing impacting the urban marketplace?  

Palmisano is extremely proud to play a role in the revitalization of New Orleans’ downtown core. Our projects have placed numerous historic buildings back into service, improved vacant blocks with new construction and provided entertainment opportunities for the growing population. The firm’s portfolio includes several hundred million in high profile projects, such as the new Moxy Hotel in the CBD, May & Ellis apartments in the French Quarter, Ace Hotel and Seaworthy Restaurant, new construction at the Rampart Homewood Suites and the Julian Apartments on Magazine. We also focus on giving back to the community through the Palmisano Foundation, which was created to focus on educational and children’s causes including PlayBuild NOLA, Growing Local Nola and New Orleans Women and Children’s Shelter.  

What do you project for the future? Six to 12 months down the road? Is this a new peak or baseline?  

I have run across two different theories regarding this urban revitalization. Some people feel that it would be difficult for the current level of activity to continue, but there are also many others that argue this is just the beginning. One interesting trend to note is that we see projects moving outside of the downtown core into areas such as the Bywater and Lower Garden District. Our opinion is that development and construction will continue its momentum for at least the next few years. 



BOTTOM LEFT- May & Ellis apartments (221 Chartres St.) a luxury apartment building that was once a Hurwitz Mintz furniture store are part of the Palmisano Group’s several hundred million-dollar portfolio of projects. BOTTOM RIGHT “We have not seen this type of new construction in the past 10 years,” says Palmisano. Among his company’s current projects is a future Homewood Suites at 317 N. Rampart St.
 




URBAN DEVELOPMENT

Matt Schwartz

Principal, The Domain Companies


Matt Schwartz co-founded The Domain Companies with Chris Papamichael in 2004. Both oversee the company’s development activities and are responsible for the overall management and oversight of company operations.

 Over the past 15 years, Schwartz has been involved in over $2 billion of development and capitalizations in virtually every sector of the real estate industry. Prior to launching Domain, Schwartz was a senior vice president of Related Capital, then the largest multifamily owner and financial services provider in the country. Schwartz currently serves as a member of the Business School Council at the A.B. Freeman School of Business and as chairman of the board of Liberty’s Kitchen.
 



URBAN DEVELOPMENT

Chris Papamichael

Principal, The Domain Companies


Chris Papamichael has extensive experience in the identification of acquisition and development opportunities in diverse markets and real estate sectors, as well as the design, construction and management of unique and high-quality assets.

 Prior to launching Domain, Papamichael held positions at some of the country’s largest and most respected real estate investment and development firms, including W&M Properties, one of the country’s most successful real estate investors and owners; Crescent Heights, one of the country’s largest luxury condominium developers; and Aris Investment & Management, a New York City multifamily specialist where he was responsible for all investment and development activities. Papamichael currently serves on the board of the Louisiana Children’s Museum.

How would you both describe the status of urban development in New Orleans?

In a word, booming. We’ve seen an acceleration of sustainable development in the Downtown New Orleans core. A number of trends are making Downtown a more attractive place to live, work and visit, including improved transportation access and streetcar extensions, the renovation of historic theatres, and the introduction of diverse entertainment and hospitality offerings. The increase in residential density Downtown is very exciting, with new housing, amenities, retail and dining options coming online to meet demand.

How are your company’s developments impacting the urban marketplace?

Domain’s projects contribute to Downtown’s vibrancy and growth, providing spaces and opportunities for innovation, collaboration and community. Ace Hotel New Orleans is one example — a complete renovation of three historic buildings and the addition of a new structure have created a hub of food, music, art and culture.

The South Market District has become a thriving center for some of the best residences, restaurants, shops and amenities in the city, with the upcoming Morris Admji-designed Standard condominiums raising the bar for ownership opportunities.

Our upcoming co-working space — The Shop at the Contemporary Arts Center, New Orleans — reflects how our local economy is developing, designed to meet the needs of the growing technology and arts-based industries and creative professionals. With networking space and valuable programming and benefits, The Shop will offer an exciting new way to work and collaborate in New Orleans.

What do you project for the future? Six to 12 months down the road? Is this a new peak or a baseline?

We’ll see momentum continue to build as additional projects come online. Exciting new hospitality options will bring a diverse group of visitors Downtown, further supporting the area’s shops, restaurants and entertainment venues. Mixed-use developments like South Market, combining first-class residences with prime commercial space, will attract more households and businesses to the area and continue to transform Downtown into a vibrant, walkable community. We’re very optimistic about Downtown’s future, and look forward to continuing to lead and support its incredible growth.


The South Market District, Domain’s mixed use developent Downtown, will include 1,000 luxury apartments and condos and 200,000 square feet of retail space. Shown here are views of The Standard luxury apartments (top), which just began construction, and Park (bottom)— 27,000 square feet of retail completed in 2014.

 




URBAN DEVELOPMENT

Tara Hernandez

President, JCH Development

Photo Tracie Morris Schaefer


Tara Hernandez is president of JCH Development, an urban real estate development company that converts underutilized real estate into “cool,” creative spaces. She has developed residential, multi-family, and commercial projects throughout Louisiana, and in Mississippi and Missouri, including Blue Plate Artist Lofts and Magnolia Marketplace Shopping Center, where her firm served as a co-developer.

In her role as president, Hernandez most recently assisted Liberty Bank & Trust as its owners representative, with the company’s newly opened branch and retail space on Gentilly Boulevard. She is a Louisiana real estate broker, a past trustee of the Urban Land Institute and past chair of ULI Louisiana.

How would you describe the status of urban development in New Orleans?

It has drastically changed post-Katrina. There have been numerous and various types of projects completed, currently under construction, as well as many in pre-development stages. These opportunities have been delivered by both local and out of state developers and definitely provided the city with new tax revenues, a diversity of services and products, as well as other benefits for residents. It has also assisted with the renewal and repopulation of several neighborhoods throughout the city.

How are the developments your company is doing impacting the urban marketplace?

Our firm has been instrumental in creating new housing and retail options previously not found in the city, in neighborhoods where redevelopment was instrumental in the revitalization of an area. We have also offered options to a diverse mix of residents and customers. I would like to think that we have positively impacted peoples’ lives and lifestyles in a meaningful manner.

What do you project for the future? Six to 12 months down the road? Is this a new peak or baseline?

Since our business involves lots of forward thinking and timing, the next six to 12 months will mostly bring to market projects currently under construction and those that have already received zoning approvals. Since several new projects underway involve larger, mixed-use developments, I think we will probably see a few more announcements for projects, but also some wait and see for absorption. I hope to see a balance of more affordable and workforce housing options — which are challenging due to the costs to develop projects these day— but also some additional retail options outside of Downtown. It will be interesting to see whether we continue to attract new residents to the city. I am hopeful for a bright future!



JCH Development served as co-developer — along with Stirling Properties — of Magnolia Marketplace, a 106,000 square-foot shopping center on South Claiborne Avenue and Toledano Street.
 




RESIDENTIAL

Rick Haase

President, Latter & Blum, Inc.


Rick Haase oversees the operations and strategic direction of the Latter & Blum, Inc.’s family of companies. The company, which includes more than 30 residential and commercial offices throughout Louisiana, Texas and Southern Mississippi, completes approximately 15,000 real estate transactions annually while operating successful mortgage, insurance and title and escrow service companies.

 Haase has been active in brokerage and management since 1978. He currently serves on local, state and national boards including: United Way, Greater New Orleans Inc., the New Orleans Police and Justice Foundation, Greater New Orleans, Inc., Project Upstream, Inc. and the Real Estate Services Providers Council.

How would you describe the state of the residential real estate market in the greater New Orleans area, both in terms of housing and rentals?

The residential market in greater New Orleans is truly a tale of two cities: we have the bellwether markets like Garden District, Uptown, Lakefront and West St. Tammany all doing very well, with the hottest of the markets being Garden District and Uptown. These two markets are extremely inventory constrained, especially in the sub $500,000 price range. This scarcity has caused an abnormal price increase. For instance, even though we only experienced a 1 percent increase in the number of closed sales taking place (in Garden/Uptown ) during a rolling 12 month period, we have seen an almost 15 percent increase in total sales volume due to rapid price increases on a per-sale basis.

This lack of availability has also created winners in close by neighborhoods, as we have seen buyers instead purchasing in Mid-City, Lakefront and the Bywater/Marigny markets.

Conversely, the markets are showing steady but essentially flat home sales in East St Tammany. The river parishes have seen very lackluster sales numbers by comparison.

Where do you see the market going? Have we peaked or is this a new baseline?

Overall, the housing market continues at a strong pace and we expect that we will likely finish out at 5 to 6 percent overall growth in sales volume activity, with half of the growth coming from price increases and the other half from a higher number of residential sales.

What do you think is the hottest upcoming neighborhood/market?

In terms of overall activity, they remain the Garden District, Uptown, Mid-City, Bywater/Marigny, West St Tammany and Lakefront.

Millennial buyers are wanting to live closer to the city, and as rental rates have risen to record highs, more and more of these buyers are realizing that they can change the financial trajectory of their lives by purchasing and growing equity in something rather than paying rent. We are already seeing significant movement into the purchase market. The last available numbers are that the net worth of a United States home owner is 41 times that of an apartment renter. There is a very causal relationship between those facts.

Driving our markets forward are two huge factors: one being tremendous pent up demand as household formations continue to grow and home ownership costs remain affordable relative to incomes. Additionally, mortgage financing is cheap today and has become more and more available the further we get away from the 2008 financial crisis and the resultant over-tightening of mortgage financing requirements.

What are the challenges for residential, moving forward?

Challenges will continue to be trying to buy in a very low inventory market and economic uncertainties relating to the energy sector — particularly unemployment rates in the all-important oil fields and oil services industry.
 




RESIDENTIAL

Lynda Nugent Smith, CRS, GRI

Risk Management Broker Keller Williams and Chair of the Louisiana Real Estate Commission


 A 44-year veteran of the real estate industry, Lynda Nugent Smith was the first team leader/manager for Keller Williams in the state of Louisiana. Proficient in residential, commercial, new construction, land development and condominium conversion projects, Smith currently works with her daughter Lesha — 2016 president of NOMAR — and son-in-law, Michael, as The Nugent-Freeland team, one of the most successful real estate teams in the Metro area.

 Her honors include Realtor of the Year for the Louisiana Realtors Association in 2010 and New Orleans Metropolitan Association of Realtors (NOMAR) in 2007. She is a past president of NOMAR, the Home Builders Association of Greater New Orleans and the Jefferson Economic Development Commission (JEDCO).

How would you describe the state of the residential real estate market in the greater New Orleans area, both in terms of housing and rentals?

I am happy to say that the real estate market in Metro New Orleans is stable. The housing market is at a steady pace in both sales and rentals. The rental market is a bit tighter, especially in light of the recent flooding to our west. We have still had a number of commuters back and forth between the Baton Rouge and New Orleans areas so some of these people are returning. Like everything else in the city, each neighborhood is a bit different from the next, so some are just a bit more stable and “hotter” than others.

Where do you see the market going? Have we peaked or is this a new baseline?

The market is holding it’s own but I do see some slowdown in certain markets and price ranges. We have had a good influx of medical new hires that have been taking up some of the inventory. A lot depends on the age and family makeup as to what communities are most suited to the households, but it seems to be somewhat balanced. Some neighborhoods may have, at least temporarily, reached a saturation point on pricing. But the old 1, 2, 3 of priority still holds true: location, location, location.

What do you think is the hottest upcoming neighborhood/market?

There is still much demand in the price ranges that give you the most bang for your buck, so neighborhoods that provide an upside potential for good future return on investment and opportunity for growth are seeing the best gains. Some parts of New Orleans where renovations are ramping up, as well as parts of St. Bernard and Arabi, are providing good shelter for reasonable pricing. Schools in St. Bernard are also highly ranked and that is appealing to growing families.

What are the challenges for residential, moving forward?

It depends on where you want to live. So many parts of the metro area are just built out (most of East Jefferson for example) and present re-development opportunities, but new construction land is just not readily available and very costly. The more requirements and costs that are inflicted by our local governments on property owners, potential developers and builders, the less available both homes and rentals may become.

It is also a concern of mine that as new FEMA maps come out —taking large areas of homes out of flood zones that may not require flood insurance — people may drop flood policies. This would be the worst possible decision that property owners and renters could make. Lessons learned from Katrina and the Baton Rouge area need to be remembered. Keep your flood insurance, and if you don’t have it, get it!
 


The residential market remains strong, both for homes and rentals, but some slowing is beginning. (Pictured here is a home for sale in Kenner offered by The Nugent-Freeland team).
 




AFFORDABLE HOUSING

Andreanecia M. Morris

Executive Director, HousingNOLA


Andreanecia Morris founded HousingNOLA after spending 20 years working to create affordable housing opportunities in the Greater New Orleans area in both the public and private sector. A 10-year partnership between the Greater New Orleans Housing Alliance (GNOHA), the Foundation for Louisiana, the City’s Office of Housing and Community Development, and dozens of public, private and nonprofit organizations, HousingNOLA is working to address the need for 33,600 additional housing opportunities in the city by 2025.

Morris also serves as president/chairwoman for the GNOHA Board of Governors. In April 2016, UNITY of Greater New Orleans named Morris its Outstanding Advocate for Affordable Housing.

Could you describe the situation in the New Orleans area in regard to affordable housing? How do we compare to other cities of the same size?

While many cities are struggling with affordability, New Orleans is unique. Though the housing issues we face are diverse — whether it’s skyrocketing rent, soaring insurance costs, substandard rental conditions, or, for many of our residents, barriers to obtaining housing — these problems are all interrelated and must be addressed as a whole. Almost 60 percent of New Orleanians spend more than a third of their income on housing and decision makers don’t prioritize housing because of the stigma associated with the term “affordable housing.” The housing market in the City of New Orleans and the State of Louisiana are precariously balanced and poised to falter without deliberate intervention. In New Orleans there is now a sense of urgency around the issues of equity, displacement and the right of self-determination for neighborhoods.

Can you talk a bit about the highlights of the HousingNOLA 10-year strategy and implementation plan?

The HousingNOLA 10-year Strategy and Implementation Plan, released on December 10, 2015, indicates the need for 33,600 additional affordable units in the city by 2025. Further, the data clearly shows that wages have not come close to mirroring the dramatic rise in housing costs. Since 2000, New Orleans home values and rents have both more than doubled. Fifty-five percent of New Orleanians are now “cost-burdened,” spending more than a third of their income on housing costs. The city ranks second in the nation for the percentage of renters paying more than half of their income on housing (37 percent).

 HousingNOLA aims to facilitate the creation of 5,000 affordable housing opportunities by 2021, encompassing 2,000 rentals, 1,500 home purchases, and 1,500 units for people with special needs, such as the homeless, the elderly, veterans and people with disabilities. HousingNOLA also calls on local and state officials to identify dedicated revenue sources to preserve and expand an additional 9,080 safe, affordable homes for all New Orleanians by 2025.

 HousingNOLA established goals and strategies to inform the creation of affordable housing options for all New Orleans residents. It guides policy makers in determining what funding and policy for housing should look like, based upon what New Orleanians want. Since responsibility of this plan goes beyond the realm of our elected officials, this plan will live on even as mayors, city councilmembers and other elected officials come and go. Inclusiveness and community participation in developing the housing plan are the two most important factors in determining whether HousingNOLA is a success. The diversity of participation is reflected at every level of the HousingNOLA process.

What accomplishments are you proudest of in terms of addressing this problem?

The 10-year Strategy and Implementation Plan has been embraced by New Orleans housing advocates and city leaders. The following major policy victories have already been achieved:

• The City of New Orleans’ Neighborhood Housing Improvement Fund (NHIF) has been dedicated to homeowner and renter rehabilitation in order to create neighborhood stability across the city;

• We worked with the City of New Orleans City Planning Commission to begin a study on mandatory inclusionary zoning;

• The Housing Authority of New Orleans (HANO) has implemented the criminal background check policy it adopted in 2013;

• FEMA has reclassified East Bank neighborhoods as Flood Zone X which should result in lower flood insurance costs;

• We coordinated with local stakeholders as a part of the Energy Efficiency for All (EFFA) coalition, a national collaboration to promote energy efficiency policies in multifamily and affordable housing;

• We worked with the Louisiana Housing Alliance and Capital Area Alliance for the Homeless to educate developers on using Medicaid to fund supportive services through the annual State Housing and Homeless Conference;

• Governor Edwards signed SB610 a bill that calls for predictable and reasonable tax valuation for affordable housing multi-family properties; and

• With Housing for Resilient New Orleans, the City of New Orleans is coordinating disposition efforts of HANO, NORA and the City with available funding (HOME, Low Income Housing Tax Credits, and the Neighborhood Housing Investment Fund) for affordable housing development to create the highest possible number of affordable units. Housing for Resilient New Orleans also insures that the New Orleans Redevelopment Authority and HANO continue to prioritize residential development on their available inventory.

But personally, I’m most proud of the fact that we’ve been able to develop a plan with citizens and decision makers at the table and continue to keep all parties engaged and open to addressing the issue.  

What is the biggest challenge in tackling affordable housing? How can it be overcome?

The need for a comprehensive housing plan in New Orleans has become very clear. Unfortunately, too many refuse to admit that there is a problem around housing, instead focusing on symptoms instead of systems. This makes our efforts even more vital — we must continue our strategic advocacy, aggressive engagement and innovative effectiveness to shepherd meaningful change through sustainable impact.
 


City Planning Commission Executive Director Robert D. Rivers, GCR Senior Planner Nathan Cataline and HousingNOLA Executive Director Andreanecia M. Morris present on the city’s Master Plan at the New Orleans Redevelopment Authority (NORA) for the American Planning Association New Orleans.
 




THE CBD

Hayden W. Wren, III., CCIM, SIOR, CPA

Director, Commercial/ Investment Brokerage, Corporate Realty, Inc.


With a career in real estate that has spanned 35 years, native New Orleanian Hayden Wren has been actively involved in virtually every facet of commercial and investment brokerage, but with a specialty in the sale/acquisition of Central Business Development (CBD) properties. He has participated in an excess of $250 million in sales in the CBD alone.

Wren is a five time F. Poche Waguespack award winner, an annual award given for the largest volume of commercial transactions generated in the Metro New Orleans area, and was recently inducted into the New Orleans Metropolitan Association of Realtors (NOMAR) Commercial Investment Division’s (CID) Hall of Fame.

How would you describe the growth and current status of the CBD?

The Central Business District (CBD) is a tight, well-defined pocket of bustling activity that combines a strong tourism base anchored by 20,000-plus hotel rooms and world-class restaurants all within walking distance.

The CBD is also the home of the state-of-the-art Ernest N. Morial Convention Center and the world famous National World War II Museum, and serves as the center for financial, legal, accounting, oil and gas and major banking institution activities in the Metro New Orleans area. There are 14 Class A office buildings, featuring 8.9 million square feet of space that house the majority of office users.  

The CBD has a very strong residential community of approximately 5,000 residents located primarily in the Lafayette Square Historic District and the Warehouse Historic District.
The New Orleans CBD is very much alive, 24 hours a day, every day.

Are there certain sectors that are fueling this growth?

All of the market segments — i.e. office, hospitality, retail and residential — in the CBD are stable. However, the residential and hospitality segments continue to grow.

The hospitality market will soon be rolling out an additional 1,200-plus rooms. In addition, the residential market continues to introduce new product to an already active market. The market is so strong that the Loyola Avenue corridor — from Poydras Street to Canal Street — has seen no less than a half dozen formerly economically obsolete, shuttered, older office buildings being converted into apartments and condominiums.

What does the CBD mean to the Metro Area?

The CBD is very much the key link to the New Orleans Metro area. In my opinion, it is the linchpin and the showpiece of Metro New Orleans. As the CBD goes, so goes New Orleans and the Metro area.

Looking inxto the future, how do you see this area changing?

In the short term, I think you will see a continuation of residential and hotel development. To provide for the burgeoning population, I do think you will see the settling in of service-type facilities to accommodate the needs of the expanding populous. You might even see another competitor to Rouses, but on the east side of the Warehouse District.

Long-term, urban living will continue its growth (it’s already beginning) in the Marigny and Bywater. The inventory stock in these areas provides alternatives to the high cost of property acquisition in our CBD.
 


Residential and hospitality continues to grow in the Central Business District (CBD), home to the New Orleans Ernest N. Morial Convention Center.
 




MORTGAGES

Guy Williams

President and CEO Gulf Coast Bank & Trust


One of the co-founders of Gulf Coast Bank & Trust in 1990, Guy Williams has served as president and CEO for the past 25 years. When not leading his own institution, Williams has provided leadership in the banking industry as well, serving as president of the Louisiana Bankers Association and on the board of directors of the American Banking Association. He has also brought his time and talents to the boards of Habitat for Humanity, the Louisiana Housing Corporation, the Finance Authority of New Orleans, Pilots for Patients, Crossroads Louisiana, Community Sailing of New Orleans and Baptist Health Ministries.

Do you think Brexit will affect mortgage rates in the U.S.?

Brexit will probably have very little effect on U.S. markets but may, if it slows the European recovery, delay the Fed’s increase in U.S. rates. There is also a good chance that Theresa May, the English prime minister, will handle the transition well and Britain will emerge stronger with a more business friendly economy than continental Europe.

How do you see the future of interest rates in New Orleans and the Southeast Louisiana region?

We expect at least one increase in short term rates before year end. This will affect the prime rate by one-quarter of one percent and may slightly increase short-term consumer yields. Long-term rates will probably drift higher, but very slowly, unless the economy really begins to grow rapidly. Unfortunately, most economists don’t expect rapid growth until 2017, or even 2018, and the more pessimistic economists expect slow growth to be the new normal. We disagree, and expect 3 percent growth to return in the summer of 2017.

How has additional regulation affected the mortgage market overall?

The Consumer Financial Protection Bureau (CFPB) has hurt consumers. Because of the new CFPB regulations, all mortgages are now more expensive to close and take longer. Unfortunately, Congress set up CFPB to be unaccountable so there is nothing we, or our customers, can do to correct them. It is also more difficult for many of our typical Louisiana borrowers to get home loans; this includes people who are paid in cash, such as musicians, service workers, and fishermen. It is also now harder for folks who have a spotty employment history or several part time jobs to qualify — an unfortunate example of Congress empowering an agency to hurt the poor.
 




OFFICE AND RETAIL

Stephanie Hilferty

Representative District 94, Louisiana State Legislature |  Sales and Leasing Associate SRSA Commercial Real Estate


 Stephanie Hilferty has represented a variety of national, regional and local tenants in office and retail, brokering over 11.5 million in sales and leasing transactions last year. In 2015 she also became the first millennial to serve the New Orleans area in the state legislature, where she serves as representative for District 94.

Throughout her career, Hilferty has been a member of the Commercial Investment Division of New Orleans Metropolitan Association of Realtors, X Team International (retail real estate brokerage group), and the Urban Land Institute, where she served as the Young Leaders chair. In 2011, Stephanie received the highest first time recipient award from the New Orleans Metropolitan Association of Realtors (NOMAR).

How would you describe the status of the marketplace for office and retail in New Orleans?

There’s a strong demand for retail space, especially in Orleans Parish. Just recently one of my big box retailer clients asked about Mid-City and New Orleans East, both new markets for this retailer. Due to the density in Orleans Parish, understandably there are sensitivities about overcrowding and parking in some of these neighborhoods. Both markets are underserved and I would expect to see continued development in them.

Metairie, especially Veterans Boulevard, remains a prime destination for retailers entering the market. The biggest hurdle for these retailers is understanding our decentralized development and limited amount of land. Many retailers feel comfortable being in a Target anchored center or a lifestyle center — both of which are in short supply in our market. Our Target is two levels and located in a former Maison Blanche with no outparcels. Retailers have to get creative and adapt to a less traditional footprint.

I’ve seen the office market soften in the past few months. I did a rough tally of sublease space in the Jefferson Parish market, and we have roughly 100,000 square feet of sublease space on the market. Several of the sublease blocks are downsizing engineering firms engaged in the oil and gas industry due to the decline in offshore-related services. Nationally, for several years, the trend in office has been toward an open, shared office space, which increases space efficiency as well as enhancing opportunities to collaborate. This means the tenant previously occupying 10,000 square feet may now occupy 7,500 square feet or less by eliminating private offices in favor of cubicles. That can have a compounding effect in the market.

How have changes in the oil industry and tech sector affected the marketplace?

Some retailers in parishes like Lafayette and Terrebonne are seeing an effect in sales as a result of low oil prices, but I have not heard of retailers in Jefferson or Orleans experiencing a dip. Changes in the oil industry have a bigger effect on the office market when engineering firms downsize as a result of low oil prices. Overall, the New Orleans Metro area’s economy has diversified to an extent to have a buffering effect on oil price fluctuations.

The tech sector represents a bright spot and a positive diversification in our local economy. The digital media tax credit, offered by the state, has been successful in attracting companies to New Orleans such as High Voltage Software, inXile Entertainment, and Smashing Boxes, a digital product agency. Twenty-Five companies in the New Orleans and Jefferson Parish markets took advantage of the program over the past two years. Even with recent cuts to the program, the tax credit remains one of the most generous in the country. Some of these companies have partnered with Louisiana universities in training students for the industry. Tech sector jobs are solid middle-to upper-income salaries and typically attract younger workers. Particularly in the CBD, we are seeing the market respond with apartments and condos within walking distance of shopping, dining and work. I wouldn’t tie this market reaction exclusively to the tech sector, but it is certainly a contributing factor.

What’s driving inventory?

Large-scale projects, such as the University Medical Center and Veterans Affairs Hospital, have touched off a series of residential, office and retail developments in Mid-City. Developers are getting lease commitments from retailers or office tenants prior to coming out of the ground, so specific demand is driving development. Once a development is coming out of the ground 70 to 80 percent is usually pre-leased. Partially due to our small geography and fortunately due to high demand, we have very little excess retail inventory.
 



 




A Rare Breed

Fidelity Bank President & CEO Alton McRee explains the pros and cons of being one of the few mutual banks in the state.


Fidelity Bank is not for sale, and never can be.  

“We’re a mutual bank, which means we’re owned by our depositors,” explains bank President & CEO, Alton McRee. “That means unlike a stock bank, we cannot be purchased.”

Mutual banks were common when Fidelity was founded in 1908, back in a time when laws didn’t require banks to have significant capital. “As customers did business with a bank, they would pledge a small amount of their deposits to help capitalize the institution,” McRee says.

In today’s drastically different regulatory environment, mutual banks have been slowly disappearing. “Out of the 130 Louisiana chartered banks, only 11 are mutuals,” he says.

What has happened to the mutual banks over the years? Most, says McRee, have converted to stock banks. The reason? The ability to raise capital.

“Mutuals have no way to raise money other than to earn it,” he says. “Stock banks, however, can raise capital through the sale of stock in the bank.”

Headquartered on St. Charles Avenue, with 18 full service branches in the Greater New Orleans area, Fidelity, McRee says, isn’t going anywhere.

“We’re fortunate to be one of the strongest capitalized banks in the state,” he says. “We’ve always been known as a mortgage lending bank and we’ve recently expanded on that with the acquisition of NOLA Lending in January of 2014. We’ve also expanded our services since 2007 as a community commercial bank. That means we now offer a wide array of services for businesses and consumers. We are using our solid base of 108 years of experience and building on it in a way that is relevant to today’s changing marketplace.

 

 


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